How to Take Control of Your Finances
Posted: January 5, 2022 in Achieving Financial Goals
Starting and sticking to a budget is the first step toward financial success, but truly taking control of your accounts requires a bit more than just a solid savings and expense management plan.
A budget tells you what you can afford to spend, but adjusting it to account for new expenses can be an ongoing shuffle. Increasing the efficiency of your lifestyle to adjust for your current goals any time they change requires money management smarts above and beyond the budget calculations. It also requires the wisdom to understand when it's time to commit to saving for a goal and when your long-term success is best served by blowing off a little steam and getting a few things you've been putting off. Here are five money management tips you can count on to help you increase your overall financial health.
1. Go Paperless for Efficiency
Tracking expenses and paying your bills is hard work, and the less time and energy it takes, the more effective you can be in other areas of your life. It's an activity that costs money, but going paperless can help you save some of that money while saving yourself a lot of time.
Instead of buying storage for paper copies of all your records, protecting them against fire or water damage, and making duplicates in case the first copy is destroyed, you can easily digitize records and easily back them up to a variety of devices and storage services, making them securely accessible from private cloud storage or your own offline copies.
Digital storage is cheap, and organizing digital records requires a lot less overhead than managing hard copies. It's also a lot less expensive to reproduce them on demand when applying for loans. Our team makes it easy to sign up for eStatements inside digital banking under the Statements tab, and you’re always welcome to ask our team for their tips if you need any help.
2. Shop Smart to Get More for Your Money
What is the best way to manage money without changing your personal projects or recreational options? Smart shopping. If you bargain hunt, you can buy more with the same budget. Sometimes, this means choosing to sidestep name brands to buy the less expensive version of common items, but not always. After all, sometimes the design and build quality matters, making the branded option the best buy. If that's the case, shopping multiple locations and retailers can show you a price landscape with deals in unexpected places.
You might also consider timing purchases to annual sales and business cycles. For example, the price of barbecue grills goes down every fall, even without clearance sales. Buying next season's grill shortly after Labor Day could save you a lot of money in the long run.
3. Build Your Credit Score Strategically
A good credit score is key to lowering interest rates and opening up options for loan terms you might not be able to access otherwise. It affects the cost of both unsecured and secured debt, and some types of insurance. As a result, your credit score has a direct impact on your ability to purchase assets.
Qualifying for a lower interest rate means being able to afford a larger loan over the same term. Learn how different types of debt are weighted, then coordinate your asset purchases and other financial decisions to keep your debt in the range where it will not detract from your score due to its size. If you can do that, then keeping a great score is as easy as making payments on time. To get started, try paying down unsecured credit lines. Excessive unsecured debt can lower your score dramatically even when your payments are all made on time.
4. Track Your Debts and Debt Types
Tracking and limiting your debt doesn't just help your credit score; it also helps you get more for your dollar when you're managing essential expenses. The less you're paying in interest, the more money you have for cash purchases and bills like rent or your utilities. Secured vs. unsecured debt aren't the only types to track.
For example, debts for major asset purchases should be counted separately from debts for education or payment plans for medical debt. Entering into payment plans for large expenses can be an excellent way to avoid depleting your savings while staying within your weekly and monthly budgets, but understanding when you can afford to make major purchases means understanding when short-term debts will be paid back, so you don't wind up with too much debt to maintain your savings plan.
5. Use Your Money To Make Money
When you put money into a savings account, you can expect to make a little back as dividends, but it's very little. As you accumulate savings, consider your options for accelerating the growth of your capital. Something as simple as a 24-month Certificate from ProFed Credit Union can increase your interest earnings.
For long-term goals like retirement or homeownership, investment in money markets, mutual funds, and other products with even higher yields can be the key to generating additional income and reaching your goals faster. All the best ways to organize your finances involve using a variety of investments to manage risk while you grow your money.
Savings plans are just the start of it, there's a whole world of financial planning and portfolio management out there to master if you really want to take charge of your money.
Learn More About Money Management
These key tips are a great way to learn the basics of how to manage your money, but there's a lot more to understand if you really want to take control over your finances in the new year. Luckily, there are people who want to help you be successful.
Check out our free financial education tool, Money Sense, and keep an eye out for more articles like this one to keep learning tips and tricks for making the most of your personal finances.
Don't hesitate to ask a ProFed Credit Union team member for more information about consolidation loans, inexpensive credit lines, and other tools to help you organize and control your finances as you plan for your future. From vehicle loans to savings options, there are a wide range of tools at your disposal.
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