There’s a saying that mothers are always right, and most of the time, they are. However, it’s difficult to raise and support a family on a budget, especially when the economic landscape isn’t exactly getting easier on the budget.
To help keep your finances in order, let this article from a mom give you some tips for financial success. With these savvy tips, you can achieve your goals and lead a comfortable life. Below are 10 key strategies to financially get ahead in life.
Make a Comprehensive Budget and Stick to It
One of the best starting points for individuals who are just jumpstarting their financial journey is to set a budget and stick with it. This, after all, affects just about every other financial aspect and goal that you may have. A budget allows you to keep tabs on your finances. To do this, track all the money you have—whether it’s through your salary, annual bonuses, or company benefits and reimbursements.
After listing these down, be sure to write down your income and factor them into the list of all the monthly expenses you might have. Another extra step to take when it comes to budgeting is having your financial statements ready, including bank statements, utility bills, mortgage or car loan statements, and the like. This allows you to create a monthly average that helps you stay true to your budget.
Other expenses that may not be fixed include groceries, entertainment, shopping and recreation, eating out, and the like, so allocating a certain budget towards this still lets you enjoy the small things. Make sure that your expenses are covered by the money you have or will be coming in.
Track Your Expenses
It’s easy to go overboard with your spending, especially when you don’t see where your money is going. Sticking to a budget will be much easier if you keep tabs on your expenses and where you are spending your money.
By tracking your expenses, you can start getting your financial ducks in order. Not only does this approach make you see where you are spending, but also what other aspects you can cut back on. Thankfully, there are financial trackers you can set up either manually or with the help of a mobile app, the latter of which allows you to track your money even while you are on the go.
Through these, you can make expense tracking a part of your everyday routine. If using apps isn’t your thing, don’t worry. There are still other ways to go about this—such as using Google sheets or even manually listing or writing your expenses down.
Do Away with Unnecessary Costs and Spending
There certainly are endless wants in life, but that doesn’t mean buying all of these and being broke is a good idea. Put a value on your money, particularly since it doesn’t come easy and you work hard for it. Now that you have a deeper insight into what you spend on by tracking your expenses, you can start identifying certain areas you want to and can afford to save on.
Subscription plans for cable television, music streaming, and the like are just some things you can start on. Buying that cup of joe every single morning from the overpriced cafe also racks up your bill. This might be another place where you can save more. Instead of buying out, why not make your coffee at home and bring this to work instead? This also applies to take-out meals and groceries.
Another way you can eliminate other costs is to pay your bills on time. This way, you can say goodbye to late fees, penalty charges, and worse, a lower credit score. Money does not grow on trees, and by realizing this, you can put a premium on the money you’re raking in.
Start Saving Right Away
This is perhaps one of the best pieces of advice that a mom can give not only to a fellow mother but to just about everyone. The best time to start saving is today regardless of your age. As a matter of fact, if you’re on the younger end of the spectrum, you’ll thank yourself in a few years.
While you may think it may be too soon to think about retirement, the truth of the matter is that you won’t be getting younger. By taking advantage of your age, such as your 20s and 30s, you can plan out your retirement and other aspects of your life—from vacations to a home and many others. Saving at an early age gives you the power to enjoy compound interest as you get older.
This means that you not only get to earn more money based on what you put in the bank but also the interest that the bank pays you from not touching the principal amount. The sooner you save in your life, the more opportunities you have to grow your money over the years. Coupled with company or workplace-sponsored retirement plans such as the 401(k), you can grow this and achieve financial success.
Make Saving Easier with Automation
Automatic contributions will make your life easier. By setting your account to automatically deduct money from your salary or paycheck straight into your savings account, you are making regular contributions and increasing your savings over time. Think of automating your savings as another monthly expense.
By taking away these funds and funneling these into your savings account, you are putting an emphasis on how much you save and, by extension, are reducing the risk of spending or touching this. The idea of automating your savings is that you get to pay yourself first. By prioritizing yourself, you can establish a healthier financial approach to saving.
You can start paying yourself or setting aside a certain percentage of your salary before paying off your bills and expenses, such as 10% to 20%. What’s great about automation is that you’re more likely to meet your savings goals since you’re taking forgetfulness out of the equation. Automation doesn’t just apply to savings, it can also be used to conveniently pay off bills and utilities, lessening the chances of getting penalties and late fees.
Establish an Emergency Fund
Many people forget to save for a rainy day, which usually drains their respective savings accounts. Having an emergency fund can remedy all of that, or at least the weight and gravity it has on your savings and expenses. An emergency fund can help you pay off unexpected bills and expenses, such as emergency health or hospital expenses, car breakdowns, and the like.
It also gives you the peace of mind you need knowing you have the capacity to cover unexpected costs that may arise. In addition, it’s important to point out that this rainy day fund lets you cover this expense without having to take out a loan or use your credit card, saving you from incurring interest and spending more.
Preparing for the unexpected is challenging, but it’s even more difficult to shell out money you don’t have. Being financially prepared for rainy days ensures you’re not caught off guard when the time comes.
Save for the Future and with a Goal in Mind
Retirement isn’t the only thing you should be saving up for. After all, this may not be the only goal you have in life. This is why it’s essential to determine other reasons why you may be saving up or are planning to save in the first place. Whether it’s going back to school, going on a vacation, purchasing your first home, buying that car, or simply growing your family, all of these are valid reasons that help make saving worthwhile.
Your financial goals don’t have to be so far off and can be short-termed. Setting your financial goals lets you better visualize what you are saving for, whether it’s soon or it’s still a long way to go. In relation to this, writing how much you need to purchase or achieve these goals helps you stay on track and set aside money for these.
Once you have these goals in mind, the next logical step to take is figuring out how to achieve these financially, how much you’re going to contribute to these every month, and in a timeline you are comfortable with.
Free Yourself from Debt
Credit cards and loans are some of the most accessible and convenient ways to gain access to money right away. Plus, these can be used for almost everything, which is why many people use them for almost all purchases. Racking up credit card debt or getting loans will make you gain more debt than savings.
Sure, these certainly come in handy during emergencies, but failing to pay these off on time and in full will only keep it incurring interest. If you already have credit card charges and loans under your name, the next best thing to do in this situation is to slowly eliminate debt from your life.
Start paying off your credit card debt and loans so that you don’t pay more than you need to. Create a feasible debt repayment plan so that you can pay off your balances right away and, if possible, in full. Although paying off just the minimum required amount is tempting, remember that these come with high interest rates that keep on piling up.
Don’t Buy Big Ticket Items Right Away
Investment pieces are key to helping you make the most out of the things you purchase, whether it be clothes, appliances, gadgets, furniture, and whatnot. However, with the costs associated with these pieces, it can be quite overwhelming on your budget, especially when bought spontaneously.
This can cause a serious dent in your finances. After all, big-ticket items are called that for a reason. If you are planning to purchase investment pieces or items that err on the pricier side of things, you might want to take a step back to assess whether or not you can still wait for it.
More often than not, taking a step back and sleeping on that decision helps you gain a better perspective financial-wise. Since money does not grow on trees, making a budget plan to get the item that you want is key so that it won’t affect or impact your finances hugely. What’s great is that big-ticket items often go on sale as well. Waiting until that time comes will reward you greatly, particularly when it comes to saving big bucks.
The world of investment and wealth management seems so intimidating, particularly when there are various terms and avenues you have to explore and face. Investments are actually a great thing as this gives you another stream of income that you can live on in the future. Similar to saving, investing early yields ample returns, which is why doing it right away when you can is the best way to go.
This way, you can see solid returns on your money over time. If you’re a bit wary, you should start investing small amounts you’re comfortable with and work your way up from there. Something to think about when investing, however, is that you want to allocate around 10% to 15% of your income for your retirement and other goals. For this, you’ll need an investment account to get you started.
Apart from opening an investment account, you should also explore investment options that are right for you. This will diversify your portfolio and help you understand the value of each investment. Some of the beginner-friendly options include stocks, bonds, mutual funds, exchange-traded funds, and even properties.
By following these tips for financial success, you can become a financially-savvy person that can achieve your goals one by one.
Using these strategies will help you build the foundation for a solid financial path in the years to come. You can also check out other financial learning resources, such as the best finance books.