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As we get closer to the end of the year, it’s a great time to think about how you manage your finances and the changes you can make for next year.
The purpose of focusing on how to manage your finances is to make it easier to save money and build wealth.
However, most people believe it’s easier said than done.
Well, we are going to share exactly what we believe are 5 effective tips for anyone to manage their finances.
In fact, when we say manage your finances, we simply mean learn what to do with money and how to handle it.
With the simple tips in this post, you will be able to take a new approach to managing your finances.
Also, we have a free online course called 7 Secrets to Supercharge Your Finances that will help you reveal key areas in your finances that will help you start building wealth.
1. Save a certain amount of money each week or month
It can be hard for some people to find ways to save money each month. In this case, you want to break your savings goals into smaller amounts so it can be more achievable.
This is a great way to save money without much effort. For example, you can play to save $20 per month. Further, you can save $5 per week and you will have a small amount of money saved each week.
The goal of this approach is to find a strategy that works for you and helps you stay on track with savings.
2. Give yourself a monthly amount for fun money
Managing your finances can feel restricting at times. However, you need to set a budget item to enjoy some of your money each month.
To clarify, this should be a small amount when you are still paying off debt. This amount should be a small percentage of your monthly income and nothing too major. Keep a realistic budget and this amount can increase when your are debt-free.
A budget for fun money allows you to not feel guilty about spending money. It’s also helpful to set a specific amount because you will be careful with what you purchase instead of making impulse purchases.
3. Manage your finances and stay motivated
Managing your finances may not be an easy task for you. You may get tired, frustrated, and want to give up.
To stay motivated, you need to reward yourself for reaching your goals. Most importantly, you can reward yourself in a monetary or non-monetary way. The choice is yours.
Choose a couple of goals and focus on those. For example, start with the top 5 most important goals instead of trying to tackle all 25 of your goals.
That is to say, motivation will help you continue to work hard towards your goals even if you lose confidence.
4. Always take your employer's 401(k) match
A 401(k) is a type of retirement account that you can get through your employer. You can invest a portion of your paycheck before or after tax is taken out. A before-tax retirement account is known as a traditional 401(k). An after-tax retirement account is known as a Roth 401(k).
You may not have the Roth option available at your employer, but make sure you check. We suggest you always choose Roth if it’s an option. You are not taxed on the money when you withdraw it at retirement because you paid taxes on the front end.
You’ve probably heard the term “employer match” before. This is when your company contributes to your 401(k).
For instance, an employer may match 100% of your contributions up to 7% of your salary. Meaning, when you contribute 7% of your salary to your 401(k), your employer will match that and put in 7% as well.
Above all, this is basically free money that will help grow your retirement account and you don’t want to miss out on this.
Related reading: How To Start Investing With No Experience
5. Live like a minimalist
You have to get creative when it comes to managing your finances. Things cost money to purchase so if you are aware of what you purchase, you will have a better handle on your finances.
Further, you can even sell some things you already have before purchasing something new. This allows you to have fewer items and help eliminate distractions and clutter from your life.
Do you feel confident with managing your finances? Why or why not?