We can all stand to be better at money management, but sometimes it can feel really overwhelming to tackle. The good news, you don’t have to make huge, sweeping changes to your life or habits to be better at managing your finances. Try some of these quick tips to help you gain control over your finances.
1. Avoid comfort spending
Try to be conscious of when your are spending for emotional reasons. Sometimes, a shopping spree can make you feel better at the time, but it’s not good for your finances. You will be more likely to compromise your budget and possibly your financial future when you use shopping to relieve your stress or anxieties.
Instead, find a healthier and less expensive outlet for your stress relief, like running, painting, or even meditation. You can put the money you would have spent from those other activities into a savings account.
2. Start small and work your way up
If you have a mountain of debt, paying off the little debts first can give you confidence to tackle the larger ones. Now this doesn’t mean don’t pay the larger ones, it means focus on paying more than the minimum payment on your smaller debts first. Paying off one or two small debts quickly can give you the sense of accomplishment you need to stay focused when paying down the largest ones.
3. Grow your own food
Growing your own fruits and vegetable could reduce your grocery bill. According to the Consumer Expenditure Survey from the Bureau of Labor Statistics, the average American household spends nearly $6,759 a year on food, of that; $756 is spent on fruits and vegetables alone. So growing your own fruits and veggies has the potential to lower your food spending significantly depending upon where you live and the types of fresh produce you can grow throughout the year. As an added bonus, gardening is fun!
4. Be mindful of the of student loans you use
Choose federal student loans over private loans. Federal student loans include many benefits, such as fixed interest rates and income-driven repayment plans, not typically offered with private loans.
Sometimes taking out private student loans is unavoidable, but make sure you have exhausted your federal options first. That way if your employment plans after school don’t work out right away, at least your payment options are more affordable.
5. Save money to make money
Use the power of compound interest to your benefit by saving for retirement as soon as possible. The earlier and more often you invest the bigger your returns will be. Saving money in higher interest rate accounts helps you accumulate your wealth more quickly than a regular savings account. There are lots of different options for too, from Money Markets and CD’s to IRAs and 401(k)s.
6. Put your raises to good use
Every time you get a bump in pay, the first thing you should do is increase your retirement contributions. When you first start saving for retirement it can be hard to go all in on your contributions to your retirement accounts. But every little bit helps, so start small at maybe 1% or 2%. Then each time you receive a wage increase, increase your contributions another percentage. It’s an easy way to continue to build your retirement savings without having to pull money away from paying down debts.
7. Keep tabs on your credit
A low credit score has the potential to cost you thousands of dollars. Even worse, if your credit score is too low, you could even be turned down for renting an apartment.
Check your credit score regularly and take steps to maintain a good one. Doing so will ensure you are not paying high interest rates on loans, credit cards, and your mortgage.
Want more tips on how to manage your money? Check out this video of First Alliance Credit Union members sharing even more money management advice on KIMT!
8. Control spending and build credit
If you are new to building your credit or are trying to rebuild your credit, you may want to consider getting a secured credit card. It helps build credit like a regular credit card, but it won’t let you overspend and accumulate credit card debt. This is because the card is backed by actual cash--your cash. When you open the card you also put a deposit into a savings account, the amount you place into the account is your credit limit.
9. Insure your belongings
If you rent your home, get renter’s insurance. It’s affordable, like $30 a month usually. It covers your belongings the same way home insurance would. This way if your stuff is damaged in a natural disaster or stolen you will be reimbursed for your losses instead of on hook for replace all of your things.
10. Join a Credit Union
If you don’t already belong to a credit union, you should join one. They can be the place to go for better customer service and better interest rates than most banks will offer. They also tend to be more focused on financial education. For example, if your credit score is low they will teach you how to improve it, instead of just turning you down for a loan.
Manage Your Money at First Alliance Credit Union
Managing your money and making good money moves doesn't have to be overwhelming. Starting small can be easier and make a bigger impact on your life than trying to change all your habits at once. Want to make more good money moves? Take the quiz today, then schedule a free meeting with a First Alliance money navigator to get personalized financial guidance.