Image: Dan Dimmock / Unsplash
Being in control of your money is one of the most empowering aspects of adulting. Whether you want to be able to afford a deposit on your first home, start your own business, or even just go on that big holiday you’ve always dreamed of, budgeting and saving are the way to do it.
Here are five practical tips that will help you get started on the path to financial empowerment:
Find the Right Tools
To become a master at financial management, the first thing you need to do is select your tools. This could mean bookmarking the best 2024 tax return calculator, downloading a budgeting app, getting comfortable using spreadsheets, or all of the above.
It will probably take you a few false starts to find the tools that are most intuitive for you. The key is to give yourself a daily, weekly, or monthly snapshot of your financial position, so you can uncover spending patterns you may have missed.
This is how people discover (with horror) that those takeout coffees are adding up to more than you thought. For some, it’s old subscriptions sucking away their money, or loans with shockingly high interest. Whatever your hidden nasties are, the right tools will help you uncover them and then take action to get them under control.
Prepare For The Unexpected
An emergency fund is non-negotiable if you want a stable financial future. Just one unexpected bill can put you into debt if you’re not careful, so it should be a priority. Experts say around 3–6 months of expenses should be the minimum for an emergency fund. So, once you’ve completed the first step above, use that data to determine your average monthly expenses, and then work on saving that up three-fold and then six-fold.
Budget Realistically
Around 73% of Americans say they don’t follow a budget. Unfortunately, this isn’t working out too well for them. Statistics show many Americans are also struggling to manage their finances, with snowballing debt contributing to their endless battle.
Budgeting is a great way to gain control of your finances. For it to be effective, however, your budget should be simple and uncomplicated. Start with everything you have coming in and everything that needs to go out. Anything left over can go to savings, investments, and discretionary spending. It’s a great starting point, where you can then make adjustments based on any debt, financial goals, savings, and other factors.
Pay Yourself First
Once you’ve saved an emergency fund and got a budget in place, that doesn’t mean all extra money is spending money. While it is healthy to allow some discretionary spending each month, you should also be diligently putting some funds away for your future. Whether this means growing your emergency fund, contributing to your retirement account, or investing in an Exchange Traded Fund (ETF), always pay yourself first before blowing your money on things that won’t bring you lasting fulfillment.
Cut Costs
A great place to start when reining in your spending is with unused subscriptions, something Americans lose over $30 dollars to every single month. You could also look at cutting down takeaway lunches and coffees to once a week as a treat.
Then there are cheaper utility bills, DIY beauty treatments, home cooked lunches—plenty of ways you can trim down those outgoings, giving you more money to put towards financial goals that mean something to you.
Budgeting and saving does not need to be intimidating or complex. By following the tips above and being honest and dedicated to the process, you can take control of your finances and build yourself a secure, exciting future.
