Now more than ever, Americans need some financial management tips to help them stay on top of their finances. As the economy starts to turn around for the better after being severely impacted by the health crisis, you need to make sure that you are able to monitor and manage your finances well for you and your family.
There is no doubt that the health crisis brought about by the novel coronavirus challenged not only American families but even big companies and corporations as well. Finances were impacted even causing some companies to close their doors. This led to a lot of Americans losing their jobs or being put on furlough.
With companies starting to open up again and jobs getting back on the market, there is a good chance that you will see your finances improve. This is the best time to get it back on track with some helpful financial management tips. It is also a good idea to take a look back at the pandemic and the lessons it taught you.
The pandemic was a tough time for several sectors of society. No one was prepared for it and it showed. The problem that started as a health crisis rippled out to the economy and later on to household finances. Suddenly, people were starting to worry about their health and where to get their next meal. In all these, there are powerful lessons you can take from the experience.
Be in control of your expenses
One of the most basic yet often overlooked financial management tips is to stay on top of your expenses. It seems pretty easy but a lot of Americans are having a difficult time with this. In fact, Mint mentioned that about 65% or 3 in every 5 Americans are having a hard time recalling what they spent on the previous month.
The simplest approach is to list down what you spend on every single time. It seems like a lot of work but jotting down all your expenses will help you remember where you are spending your money on. It could be difficult and cumbersome at first but you will get used to it. You do not have to do it all year round. Just enough that you get an idea of how you are spending your money.
Start with a week then take a look at your list. Make the necessary adjustment and check if you were able to save money. Then continue making adjustments until you feel comfortable with the way you are spending money. This strategy will help you stay on top of your money and be in control of your daily expenses.
Create a comprehensive household budget
More than just keeping tabs on your expenses, one of the best financial management tips is to create a comprehensive household budget. This seems to be a pretty easy process but a lot of Americans seem to forego having a budget. It also does not help that inflation is making it a lot more challenging for households to budget.
According to CNBC, US households need to account for an additional $296 a month in their budget due to inflation. This is an additional burden to a lot of families. But regardless of this, it is important to have a comprehensive budget to help you manage your finances. This is one of the tools you will need to guide you in how you spend and save your money.
Your budget is composed mainly of your income and expenses. The first mistake most people make is not taking their budget seriously. Rounding everything off rather than putting in exact amounts and not jotting down income and expense is a big mistake. You need to sit down, roll up your sleeves, and put in the work.
Assign a credit card for specific expenses
One of the most useful financial management tips especially when you have multiple credit cards is assigning each of them for a specific expense. CNBC shares that on average, Americans have 4 credit cards. Some have more cards than others. If you have a number of credit cards under your name, you can try using this strategy.
You can assign one card to pay for all your car expenses, another for utilities, and maybe another one for all food expenses. This way, you get to manage each of your expense items better. Of course, this goes without saying that you need to make sure you do not overspend on your budget. This is because it is a lot easier to spend over budget with a credit card.
One thing you have going for you is that you get a statement at the end of the month. You get a complete list of what you spent on and the dates you bought them. This makes budgeting a lot easier for you. The list gives you the chance to double-check your purchase to make sure you are still within budget.
Separate your needs from wants
One of the most challenging financial management tips you can take on is separating your needs from your wants. For some, there is already a fine line that separates the two and it is quite challenging to put a clear distinction. If you are like them, you need to put in a lot of effort to make sure you do not confuse one with the other.
The first step is to identify and even write down needs and wants. It would be helpful to put in an amount next to them to help you identify which ones cost the most. This exercise would help you determine where your expenses are focused. If you are prioritizing your wants over your needs or if it is the other way around.
Save up for your want
If you are having a difficult time getting sliding your wants down your priority list, you can choose to save money for it. The idea is to manage your wants and not let them ruin your finances. Remember, you do not have to completely forget about your wants. In fact, you can use them as motivation. Try saving up for them.
If you want to upgrade your smartphone but the one you have is still working in good condition, then save up for it. Set aside a small amount each week or month for it. You can even take up a side gig to help you save more. The important thing is that when you purchase your wants, it does not affect your budget.
Stop comparing yourself with others
One of the often-overlooked money management tips for people to stay on top of their money is focusing on their own path. There are some who slowly become too preoccupied with the life and success of other people. Trying to keep up with the “Joneses” usually steers you in the wrong direction in life.
If you have people you admire, try getting inspiration from them. But it might not be a good idea to copy and live your life exactly like the way they do theirs. It could put you in serious debt. You never know if the new car they have up in their driveway is a lease or a company car. If you try to keep up with them, you will only take on unnecessary debt.
It is important to stay on top of your finances and if these financial management tips can help you accomplish that, then use them to your advantage. Of course, you have to keep in mind your current situation as well. Choose the tips that can help you manage your finances better.