Do you want to be more financially sound in your day-to-day life?
For some, it’s easy to save money and stay on top of finances. But for others, this proves to be an ongoing struggle that’s difficult to manage and causes high levels of stress. You want to feel secure in the ways you handle your money so you can rest assured that you have enough saved and enough to spend.
But how exactly do you go about being more financially responsible? There are many different ways, but sometimes, the hardest part is knowing how to get started.
If you want to practice financial literacy, here are 3 simple ways to get started.
Have an Emergency Fund
If you don’t already have an emergency fund, then it’s a good place to start. An emergency fund, sometimes referred to as a rainy day fund, is any amount of money you set aside for unforeseen expenses.
When unexpected things happen, you don’t have to worry about taking money from your savings or checking. Instead, you reach for your emergency money and don’t feel the monetary loss. This can help you in the case of medical bills, job losses, home expenses, and more. The point of an emergency fund is to have money to fall back on in case something pops up, which can help reduce stress and keep you at ease.
Create a Budget
Those who are able to manage their finances have one thing in common: they follow a budget. Of course, this looks different for everybody because each person has different needs, expenses, and incomes. But once you find a budgeting system that works for you, it’ll drastically change your relationship with money.
Some common budgeting methods include:
- The envelope system: Putting cash into envelopes for different expenses and only spending what’s in them.
- 50-20-30 budgeting: For this method, 50% of your income goes to expenses, 20% goes to savings, and 30% goes to everything else.
- Zero-based budgeting: Allocating all of your money to savings, debt, and expenses so that your income minus your expenses equals zero every month.
Depending on impending debt, your income, and how much you wish to save, you’ll have to look around and find a method that suits your needs. Because there are so many budgeting systems out there, you’ll have to do your research to see which one works best for you.
Spend Less
While it may sound like a no-brainer, many people fail to realize how much they could save by simply choosing to spend less. You can put a certain amount away each month, but imagine what a game-changer it would be not to spend every time you felt the urge.
Only buy what you need. It might feel tempting to treat yourself to fast food after a long day’s work, but how does this benefit you financially? It leaves a hole in your wallet, especially when you have groceries sitting at home.
Think about the various unnecessary spending you do throughout the week. It helps to compile a list of the usual things or items you spend money on so you can track your habits and eliminate them. For example, if you make a coffee run every morning, you can spend less by only going a couple of times a week.
Over to You
If you struggle to practice financial literacy, you’re not the only one. It takes consistency and commitment to set goals that benefit your bank account in the long run. It’s important to set yourself up for financial success so you don’t have to worry about unforeseen expenses, bills, and putting money away for vacations and entertainment. Your saving system should help you feel better about the state of your finances so you can rest easy knowing you have a backup plan. How will you better manage your money in the future?