Managing money effectively is conducive to your overall financial health – both in the short and long-term. Keeping your finances in order will help you to avoid debts, build credit, and – most importantly – save money (which is particularly useful in times of financial difficulty).
But while there are a number of articles online that deal with money and credit management tips, many of these articles are unnecessarily complex, making it hard to know just where to start when it comes to money and credit management.
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So rather than create complex and comprehensive budgeting plans, you should instead first focus on the fundamentals, the three key pillars of good money and credit management: tracking your spending; setting a budget; and planning for the future. All your financial decisions and activities will have an impact on your financial health – positive or negative – so it’s important to understand just what you can do.
Without further ado, here’s how to manage your finances more effectively:
1. Track your spending
By tracking your spending, you ensure that you are always aware of what’s going in and what’s coming out of your account. Most people have an ‘idea’ of how much they spend on a monthly basis, but when they actually sit down and add up their expenditure, they receive a bit of a shock. Even the simplest of things – coffee, lunches, the odd drink at the pub – can eat away at your finances if you don’t track your spending!
Of course, it’s important to have the right approach and strategy to tracking your expenditure – and there are apps that can help with the process.
2. Set a budget
The next thing is to set a budget. Once you know just how much you’re spending (as well as how much is on unnecessary items or luxury goods) you can start to cap your expenditure and limit yourself. It’s more about being frugal with your money. Tracking your spend gives you numbers to work with and then you can plan everything else.
3. Save, save, save!
Lastly, saving for the future. The best way to ensure you are prepared for unexpected emergencies or bills – or to simply get out of a tough financial spot – is to save! If you track your spend and set a budget each month, you should be able to save up some money over time.
There you have it – the fundamentals of how to manage your finances more effectively in brief. That said, there are, of course, other things you can do! What about your credit score? Managing your credit score by keeping on top of credit repayments will help to build your credit score and increase the chances of being approved for a loan – should you ever need to borrow! What about borrowing? When should you borrow? How can you make an informed decision?
In our free eBook, Improving your financial health: 6 money and credit management tips, we provide some simple, actionable advice to help you not only improve your financial health but also to:
- Control your finances on a month-to-month basis;
- Manage your finances more effectively;
- and borrow responsibly if you ever need to take out a loan.
Download our eBook by clicking the button below.