The road to financial independence can seem dark and dangerous, but it’s easy enough to light the way with these simple tips for managing your money and destroying your debt.
1. Track Your Spending
Right now, due to the devastating impact of the COVID-19 pandemic on the economy, many of us have been placed in difficult financial situations. It is now, therefore, more important than ever to keep a detailed and thorough record of what money is coming in, what is going out, and where it is going. It’s okay if you’re spending too much or budgeting incorrectly – just write it all out and try to be kind to yourself. You can’t fix the problem until you know what the problem is.
2. Set Long-Term Goals
Once you’ve figured out how you have been spending your money, it’s time to assess that information against your priorities. It’s easy to splurge on things that bring us instant gratification (I’m looking at you, Uber Eats), but when you internalise the consequences of that senseless spending, it becomes harder to justify. Spend some time thinking about what you really want to achieve, and try to remember these goals when you find yourself tempted.
3. Draw up a Budget
This is the oldest trick in the book, with good reason! A budget is just a game plan for how you’re going to manage your resources so that you can get what you need and work towards what you want (it sounds way cooler when you imagine that it’s a strategy for a video game). A good budget should take into account all forms of income, expenses, debt repayments, savings plans, and investments so that you know exactly where each cent will be going.
4. Face Your Demons
Often, the reason people find themselves financially trapped is that they have a looming pile of debt that eats up a large portion of their income every month. You may feel ashamed, anxious or overwhelmed just thinking about your debt, but it’s essential to face up to your financial situation in order to change it. Acknowledging the problem is the first step and, if you’re unsure where to go after that…well, that’s what we’re here for.
Having a savings account is pretty much non-negotiable, regardless of your financial situation. Banks offer savings accounts for long-term goals, short-term goals, emergency funds, and everything in between. Do some research, talk to your bank, and reach out to financial experts (like us!) to figure out what option will work best for you!
In traditional money-making scenarios (e.g. a 9 to 5 job), you’re trading time for money, and only have so much of it. Investing is a great way to make your money work for you. Some people may think that saving and investing are in the same ballpark, which isn’t necessarily true. When you save money, it stays safe from your spending, but it generally doesn’t grow too much because interest rates on savings accounts are typically quite low. However, if you pick the right investment, you can reap big rewards for minimal time and effort!
If you’re not sure where to start, check out this list of investment options!
7. Ask for Help
This is always a tricky one. Asking for help necessitates vulnerability, which many of us are uncomfortable with – especially when it comes to money. But, if you think about it, people study for years to understand effective financial management, and therefore it’s totally understandable that they are better at it than the average person. It may be tough to admit that you’re trapped, but you’re never going to get out unless you find someone who has a key.
And you’re in luck because we have a key to get you out of your debt lock! Find out more today.