Money is one of the biggest worries in many people’s lives; however, despite this, most people don’t try to do anything to make it less of a worry and to teach themselves how to manage their money well, which is odd when they spend most of their time earning it.
Having the ability to manage your money is one of the most important steps to live a debt-free life, and usually, you only need to make small changes and have some self-discipline to become someone who is financially savvy and on your way to financial freedom.
Set Goals to Save Money
What do you want to achieve? Is it buying a house? Do you want to go on the holiday of a lifetime? Become debt-free? Whatever your goals are, it’s essential to identify them a goal but make sure that they are clear and achievable goals and then work out how much you need and what you need to be saving. If a house is top of your list, then use MortgageCalculator.Org to work out how much you can afford.
Live on Cash for Two Weeks
While this is tricky at the moment, due to COVID-19, it can be a really good exercise to live on cash for two weeks. This can really help you to realize your spending habits. Perhaps at the moment, while people are afraid of using cash, you could create a new bank account and put a certain amount of money in there for the two weeks, which you’re only allowed to use. This will highlight the things you might normally buy as you’ll have to say no to them and stick to your set amount.
Work Out Where Your Money Goes
After using cash for two weeks or using a small budget on the card, track your spending, and have a look at exactly where you have spent your money and also where you would have done normally. Is it takeaways or going out for meals at the last minute? Is it online shopping when you’re bored?
Create a Budget
Start by calculating the things you have to pay for such as your mortgage or rent and your bills; next, calculate your variable expenses such as your food shopping, travel costs, phone bills, TV subscriptions, entertainment, clothes, holidays, and morning coffees and see where you can make changes or even cuts. Right now is the perfect time to do this as well as it’s advised to stay at home more so you can easily cut your spending as there’s not much to spend it on.
One of the best things you can do to help you manage your money is to keep learning, and why wouldn’t you? As mentioned earlier, you spend all this time earning your money but so little on learning about it and how to manage it. Managing your money is an excellent life skill, and if you continue to develop and work on good money habits and stay on track with your budget, you will avoid financial problems in the future and eventually reach financial freedom.