Being smart with money doesn't have to involve high-risk investments. Financial literacy is the key to financial freedom, if you know how to play your cards right you can build up your savings and make a better spending decisions.
1.Set your financial goals.
You have to understand what you are working for to help you build budget to meet your needs. You should identify your top priorities so that you can build a budget to fit them.
2.Check your overall monthly income.
Start by calculating your total monthly income. Include not just the money you get from work but any cash you get from things like side-hustles, or child support. A smart budget doesn't overextend your means. Calculate your combined income to figure out a household budget.
- Your overall monthly spending should not exceed the amount you bring in. Use your credit card to only cover necessary items and pay back regularly to increase your credit score and have a high chance to get a loan next time.
3.Calculate your expenses.
First things first - pay off your debt. If you want to build a better budget you should pay attention to things that have to be paid monthly. This items can damage your credit if you fail to pay them fully and on time.
- This may include expenses like rent, utilities, insurance, car payments, and credit card.
- Set your bills on auto pay to make them easy to prioritize. Make sure you use this method only when you have enough money to cover your debts every month.
4.Look for places to make cuts.
Budget will help you to cut your regular expenses and start saving or pay debts. Your longer-term expenses should always be checked just like policies and insurance.
5.Build your savings.
Aim to save a fixed certain amount every month like $50 every month, this can depend on your salary then you can save at least 10-20% of your salary every month. Always keep that money into a savings account separate from your primary bank account so that you don't accidentally spend it.
- Small savings balance can help you protect yourself financially if an emergency comes up
6.Pay your debts.
Figure out how much you owe, then prioritize high-interest debts. The longer you carry a balance on high-interest debts, the more you ultimately pay. Focus on paying them first then you will continue paying others afterwards. Even the short term loan should be paid fast because they tend to be more expensive when not paid in time.
6.Spend your money wisely.
- Prioritize your needs -start each budget period by paying for your needs. Do not put any money toward non-essential expenses until all of your necessary living costs have been paid.
- Use cash instead of cards -for non-essential expenses such as going out to eat or seeing a movie, set a budget. Withdraw the necessary amount of cash before going out and leave your cards at home because they could tempt you to continuously use them.
- Monitor your spending -regularly monitor your spending in whatever way works best for you. You can download apps that can help you track your spending.
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