How to Become Great at Handling Personal Finances

How to Become Great at Handling Personal Finances

With the economy being depressed, many of us are trying to save as much money as we can. But many do not know how to go about this and may be depriving themselves of items that they truly require or are frustrated they cannot make changes that help. If this is you, read on to find methods to be better at handling your finances.

Build Savings – Most of us have heard this before, but many of us have not done this, but it is to build savings. If something were to happen to your job next week, how would you pay the bills? This is why it is always recommended to set up a savings account. Set up your banking so money automatically goes into a savings account every time you are paid. Even if you can only afford $20, it will add up over time. Whenever you get a raise or unexpected money, put it into this account until you have three to six months of expenses saved up. Have your bank set this account up so you cannot access it at the bank machine but you have to go in and see a teller.

Create a Budget – Do you know how much you are spending each month? Sit down and create a list of everything you have spent. This involves looking at all your bank accounts and any credit accounts. This is your spending. Does it surprise you? Then, using this as a guide, determine a budget that is within your actual income, not going over. Build in savings. If you are short, then you need to find ways to either decrease your spending or increase your earnings.

Pay Cash – If you are a person who tends to spend more than you make and put it on credit, it is time to stop that right now. Cut up the credit card or put it into a huge block of ice in the freezer and live off cash. If you don’t have cash, you can’t buy the item. You will quickly learn that groceries are more important than that new game.

Big Purchases – While it may not be possible to pay for large purchases such as a home or vehicle with cash, it is best to save up as much as you can before making this purchase. This helps to keep your payments lower and you will pay off the item faster, which will mean incurring less interest. These are the only purchases that you should use credit for.

If you handle your finances the right way you will never need to worry about how you will make a payment on an item or how you will pay for it. If you do need to get credit for a purchase, if you have handled your finances well you will be able to negotiate a lower interest rate.

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