People have a lot of misconceptions when it comes to saving money. Making the most out of your finances doesn’t start when you cut down on your expenses, allocate your cash to a retirement fund, or make a large investment. To be very frank, no matter how much you’re earning and setting aside, you won’t be able to save much if you’re disorganized and reckless with handling your funds.
Tracking your financial behavior is the first step in achieving full financial stability. Out of all the money hacks you see online, the greatest money-saving tip you’ll ever receive is to properly document your expenses.
Saving money starts when you organize your finances. Get you out of that paycheck-to-paycheck lifestyle with these tips!
Set your financial goals
Begin with an end in mind. What exactly are you saving for?
Do you want to save for your wedding next year, your child’s college education, or maybe even a new house? Big or small, list down all your financial goals and keep them in mind when you’re making transactions. By creating a specific timeline, you can allocate your funds accordingly and minimize your spending.
Allocate a budget for everything and prepare for unexpected changes
Once you’ve set your long-term financial goals, create a budget for your short-term expenses, including food, electricity, rent, and other necessities. Then, create a spending plan that you can follow religiously.
Your monthly expenses such as phone and electricity can fluctuate, so be prepared to pay more. You may also encounter an unforeseen circumstance like your loved one getting sick, so setting an emergency fund will help you greatly.
Plan two steps ahead and prepare for the unexpected. The little amounts of money you continuously budget can one day save you from financial distress!
Maintain good credit
Unforeseen events such as serious illnesses may occur at the most inconvenient time. A loan may sound intimidating at first, but it can be the best way out of a financial hurdle. When the time comes that you need to apply for one, maintaining good credit score is an essential factor in helping you save a lot of money.
Banks don’t want to lend to people who have a negative history with handling their money. A good credit score implies that you are responsible with your finances and will make you more likely to qualify for lower interest rates.
Two tips on how you can maintain a good credit score would be to pay all of your bills on time and to set a limit on how much you can borrow!
Keep both soft and hard copies of important documents
Organize your insurance policies, investments, passbook, bank statement, checkbook, and other personal documents. Storing your documents in a safe place will help you track any inconsistencies in your financial records. Banks and other firms can make mistakes when they’re billing, so keeping your records can help you address them when necessary.
In case you need to submit a document that’s missing, having a digital copy will go a long way and will help you avoid the pain of securing these requirements. You’ll also need to review and update the contents of your folders from time to time. Remind yourself to make monthly, quarterly, or annual audits.
To ensure the safety of your documents is to give copies to someone you trust. May it be a family member or your financial advisor, having someone else keep your records can help you stay on track of everything.
Use financial software
The use of financial software can make it easier for you to view and track your expenses. Other than Microsoft excel, money management apps such as PocketGuard, Spendee, and Personal Capital are some of the most popular tools used today.
Aside from apps, blockchain products give you a lot of convenience by working as your personal automated ledger. Applying for online banking services can also make transferring cash and payments more convenient.
This doesn’t just help you keep your file cabinet clean, it can also save you from stress and headaches.
Organize to optimize!
Organizing your finances properly will help you maintain a comfortable lifestyle. In the long run, creating a financial plan will give your loved ones a better future once you’re gone. It’s never too late to start developing good financial habits, so start doing so today