Five Timeless Money Management Tips
Inflation. Cryptocurrency. NFTs. Trying to stay on top of the latest financial news can make your head spin. So, let’s bring it back to the fundamentals. Regardless of fluctuations in the market or how many spinoffs of Dogecoin there are, what money management principles can you count on to stand the test of time?
1.) Don’t spend more than you earn.
This sounds like a no brainer, right? But the reality is it’s easy to spend more than you can afford with a credit card in your wallet. When you have more money going out than coming in, you’ll end up in debt. Due to interest, you’ll have to pay back more than you spent initially, making it challenging to get back on track.
2.) Stick to a budget.
A budget is the foundation of healthy finances. You can use an app, a spreadsheet or a good old-fashioned pen and paper. Whatever works! Track how much income you earn each month, how much you spend on expenses and how much you have left over. Based on your financial goals, decide how to allocate the remaining money. You might want to set aside a certain amount for dining and entertainment and put the rest towards savings and investments, for example.
3.) Pay yourself first.
Have you ever gotten paid and thought I’ll put what is leftover into savings, but by the time you got your next paycheck you accidentally spent most or all of it? Once you decide how much you want to save based on your budget, move that amount into savings as soon as you get paid. You can even automate this process by setting up recurring transfers from your checking to your savings account. By systematically growing your savings, you’ll be prepared for the expenses you plan for, like buying a new car or house, as well as the things you don’t plan for, like replacing a broken appliance.
4.) Start saving for retirement early.
Time is money when it comes to saving for retirement. Start investing as early as you can, even if you can only set aside a small amount. Thanks to compound interest, you’ll earn more than just interest on your principal. You’ll earn interest on the interest you accrue too.
5.) Don’t leave free money on the table.
Does your employer offer to match a percentage of your contribution to your retirement account? Contribute at least enough to get the full match. Otherwise, you’re not getting the entire benefit and missing out on what is essentially “free money.
So, try not to get too caught up in the daily headlines. Focus on these key principles, and your financial discipline will pay off!