JoshIf you are struggling to keep track of your finances and living paycheck to paycheck, you’re not the only one. The vast majority of Americans have little to no money in their savings, and they have no idea where their money goes. With some simple lifestyle changes, you can be on the road to financial freedom.
1. Create a Budget
To keep more of your money, find out where you are allocating it each month. Create a budget that outlines your necessities, as well as funds that you marked for extra spending. This strategy should give you a good idea of your total spending habits, and if you need to adjust it based on your income.
2. Categorize Your Spending
Your daily coffee runs are costing you more than you think. Variable spending can creep up on us because little bits of money come out of your pocket at once. Your fixed expenses are less likely to change from month to month, but you can control unnecessary spending or find ways to cut some corners. Skip your gym membership, and work out at home for a while.
2. Use a Money Management App
There are tons of apps that you can download to your phone to keep track of your spending. You’ll get more organized when you use an app to keep notes on personal finances. This will give you an idea of trends, and where you need to make adjustments to your lifestyle. You have to study your finances and find out where your opportunities are.
3. Set a Goal
Whether your goal is to get out of debt or save some money, a target helps us remain consistent and holds us accountable. Without a goal, you’ll lack consistency and motivation, and you’ll feel like a hamster running on a wheel. Set realistic and achievable goals, so you do not get frustrated if you come up a little bit short. If you’re not sure where to begin, try starting with an emergency fund. These funds are for situations like a car breakdown, a trip to the emergency room, or a broken water heater. Let’s face it. Life happens, and we cannot always be prepared for the unexpected.
4. Create a System
Consistency is the most critical element to keep track of your finances. Regardless if you go old school and write everything down or you monitor your finances electronically, you have to be able to access them quickly and easily. Essential elements to include are the date, money spent, and category. Record your spending every time, so it becomes a habit.
5. Analyze and Adjust
Einstein famously said, “Insanity is doing the same thing over and over and expecting a different result.” There’s truth to that statement, especially related to keeping track of your finances. Analyze your funds at the end of every month, and adjust your strategy if it didn’t work. Many people will continue to stick to the same method, but it doesn’t produce the desired result.
It can be challenging and discouraging to stay on top of your finances. With some time and discipline, you can adopt strategies to put you on a path to financial security.