Let’s face it—managing personal finances is not the most pleasurable task in life, and takes a lot of work. However, when you do work at it, you will feel like you’re in control of your life. If you need some help on how to jump start your money managing plans, here’s a quick guide to get you started.
Create a Practical Plan and Stick to It
It doesn’t matter if you’re a newbie or seasoned financial pro—you need a plan that clearly states where you currently are, where you want to be, and how to get to your ultimate destination. Creating a roadmap for financial success is not an option– it’s a necessity.
First thing you need to do is to take some uninterrupted time and write out exactly what you want to accomplish in your life. Your plan might include a college education, owning your own home, traveling internationally, raising kids or that muscle car you’ve always wanted. Whatever your goals are, write them down and start connecting the dots.
Develop Ruthless Budgeting Habits
Creating a monthly budget is easy. It’s as easy as listing your monthly income and reoccurring expenses and then assigning a set dollar amount to spending categories. You probably have created budgets in the past but “forgot” about them after a few months and changed back to your old spending habits. Now is the time to step up and create a ruthless budgeting system that doesn’t allow you to cheat or ignore your goals.
Most of the time, your budget fails due to how you perceive your budget. If you view a budget as a restriction on spending, you may rebel against your attempt at financial discipline. However, budgets aren’t meant to be restrictive; they’re supposed to be empowering. Look at your budget as a tool to get you closer to your long-term goals.
Monitor Your Credit Like a Hawk
Though you’re entitled to a free credit report each year, one annual report probably isn’t super helpful. It’s worth the money to subscribe to a monthly credit reporting service. With a monthly report, you can keep track of your credit score, debt-to-credit ratio, revolving balances, number of accounts, and personal information. You can also see factors that are hurting your score and act on them right away.
And credit agencies are not perfect in their reporting. If you see any discrepancies, such as a random credit card account you never signed up for or a false public record, dispute them immediately. There’s usually an online disputing portal where you can explain the specific error and note suspicions of identity fraud.
Get Your Investments in Order
Along with creating your budget, it’s important to take stock (pun intended) of your investments, organize them, and educate yourself on their performance. If your investments are with a financial adviser with an online presence, it’s easy to access your account and track your investments weekly, or even daily. Another way to keep an eye on your investments is smartphone apps. There are apps available with a dashboard you can personalize with the stocks and funds you own. It’s also important to educate yourself about different investment types and consider diversifying your portfolio. There is a ton of information online and easy to research different industries, listen to the stock pros, and decide whether to follow trends to evaluate potential growth in new markets.
Though some businesses don’t make it more than a few years, there are plenty of thriving companies on the rise. You just need to know where to look. Check out investment firm websites and search for publications on market trends. Along those lines, books and magazines are excellent tools for learning about investing. For example, Fisher Investments reviews and publishes guides for investing in specific industries such as technology and other financial sectors. It’s worth checking out the research the experts provide before committing your money to a new investment.
Consult With a Finance Pro
When it comes to investing, don’t buy into the stereotype about men not asking for directions. Debunk that sterotype and ask for help from a trusted financial advisor. You need someone you can give recommendations and help make sound investment decisions. Put your pride in check and ask for help—if you don’t, you’ll probably wind up hurting yourself in the long-run. Seek counsel when you need it and weigh the advice you receive. You don’t have to do everything your advisor tells you, but it’s good to get a thoughtful opinion from an expert in the field.
At the end of the day, managing your personal finances shouldn’t be a chore. Create a solid plan, stick to your budget, maintain good credit, and educate yourself on investments. Then, fearlessly apply your plan and watch your dream life unfold.