money management

4 Signs you need to improve your financial management

We all know that money makes the world go round. That being said, the way people earn, save and use their money is one of the most important tasks everyone has, whether we admit it or not. Still, some people are extremely successful and wealthier than others, while some people struggle with their finances. What’s the reason behind this? The answer is not that simple. Out of all the possible reasons and factors that could easily influence someone’s income, and the way they think and act when it comes to their finances, one thing is sure – it is the way they handle their money, that determines whether that person will be financially stable in the long run, or quite the opposite. And we all want to be financially stable, don’t we?

Recent surveys showed that millions of Americans miss their credit card payments regularly, which allows certain financial institutions to gain enormous amounts of profits, thanks to the penalties people then have to pay. This is a perfect example of how money is usually wasted, since the penalties are quite high, and the amount of money used that way could be invested in innumerable other ways or areas, giving their owner more opportunities in life, and making their lives better. Unfortunately, by being late with their payments, they lose more money than they have planned, and at the same time, they are erasing their chances for certain improvements and progress on a financial level. And this is when something called money management comes in.

Source:forbes.com

Have you ever heard about the term money management? If you have, chances are you are already living by some of its principles; or you may have just heard about it but you’ve never taken the time to really acknowledge all of the benefits people who are good at it have. Either way, this is something that every person can learn, but it is at the same time one of the most important skills you need in a fast-paced environment and a money-oriented society we live in today. Why? Things that are complicated usually need some practice to master. In other words, almost everything on the planet needs practice, and money management is not an exception. You don’t have to be great at money management nor you should feel bad if this skill didn’t come naturally to you. However, you have to spend some time researching, brainstorming and learning about the ways to become better at it. And the results will most certainly come.

Nonetheless, one of the most common beliefs is the belief that you don’t need to acquire the skill of financial management at all. The vast majority of people think that they are handling their finances the right way, even though they have debts or they make certain financial mistakes, big or small. This is one of the first signs that something is wrong and rather than refusing to get some help or gain knowledge about the topic, you should consider taking some time and putting in some effort, to find a strategy that works for you and that can help you become a master of your life (and your bank account!).

To be able to understand the importance of the topic, it is good to know what negative effects poor money management can have (although you are probably aware of some of them already). First of all, and the most obvious consequence is debt. Even with no further explanation, you know that having a debt is bad for your finances, both now and in the future, when thinking of your retirement and savings. That being said, poor money management can lead to poor quality of life when you retire, or no retirement at all, which is something you should be really concerned about. Other than that, life is full of unexpected things and events that could happen to you, and you need to be prepared for each one of them. There are certain situations in life that just take away lots of your money, so there always has to be a plan, to help you maintain stability even when something happens.

But other than thinking you don’t need financial management, what are the other signs that you need to improve your financial management skills? Let’s dig into that.

1. You don’t track your expenses

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A dollar here and there and you might think that it’s not that much and that you have things under control. But is it really like that? If you don’t know where your money is going, then you have no power over your spending nor your spending habits, which are crucial when it comes to managing your finances. When you don’t know where your money is going, you can easily overspend and in the end, you might not be able to pay off your priority bills and monthly expenses, which is something you should avoid at all costs. Luckily, there are numerous apps and platforms such as Monite that can help you out by calculating and predicting your expenses, bills and payments in general, working as your personal finance manager assistant.

2. You are not aware of your debts

Although you might think this is not so common, you might be surprised with the fact that millions of people don’t know the exact amount of debt they have! This leads to miscalculations, being late with payments and in the worst case scenario – bankruptcy.

3. Yoy are overusing your credit cards

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Using credit cards regularly can give you a false sense of having more money than you really have in reality. Also, the habit of making a debt when purchasing things is something you have to put under control and apply different strategies on your spending.

4. You are not saving nor planning

Saving money and thinking about your retirement or about your children’s education is something you have to keep in mind all the time. If you live in the moment and you still have no plans nor you’ve ever thought about these things, then it’s a clear indicator that something is wrong and that something should be changed in your mindset. The sooner you start planning, the better. This doesn’t mean you should stick to a strategy that doesn’t suit you, it simply means that you should be aware of your future and your future self, whether it is in 5, 10 or 20 years from now.

Learn How to Manage Money to Invest and Prosper

When you look at how much money you make in a year, it seems like you’ve got everything together. Your career is on an upward trajectory and you keep pulling in a bigger salary every year. But your bank account is a whole other story.

It’s a common experience: you make a lot of money but you can’t seem to save it. Life can get expensive for plenty of reasons and it’s easy to lose track of your spending. Weddings, vacations, a busy social life – it can all add up to a costly lifestyle, and that maybe what’s draining your paycheck before you have a chance to stash it away and build up some savings.

Those who never learned how to save growing up but have the means to do it now are especially prone to spending too much and not building up their investments and savings for their future. Remember that it’s great you’re earning money now, but the economy can change. What do you want your life to look like in 10, 20, and 50 years?

These personal finance tips can help you turn around your financial prospects. If you’re already earning money, half the battle is already over.

1. Plan for the Future

Img source: mscareergirl.com

One of the reasons you’re not saving is probably because you’re not planning for the future. It’s an easy trap to fall in; virtually every company out there wants you to think about today, and tomorrow never. Financing deals on things like furniture and cars are the biggest culprits. They often offer 0% loans for the first 6 months (or any given time period) – followed by high interest that you can still be paying. Think about whether or not you can afford to pay something off before interest kicks in, including your credit cards. It’s always better to pay the full balance whenever you can.

2. Break Down Your Spending

One of the hardest parts of saving is giving up life’s luxuries (big and small), but the good news is, in your situation, you don’t have to cut back to austerity. Here’s how you should break down your budget:

Fixed Expenses: About 50-60% of your income should be going toward fixed expenses like rent/mortgage, gas, bills, and generally predictable, necessary expenses.

Savings and Investments: 15-25% of your money each month should be going toward savings and investments, assuming you are debt-free. Send some to a savings account for short-term goals like a vacation, while 10 to 15% should go straight into investments.

Discretionary Spending: This is the fun stuff, and can account for up to 20-45% of your spending, depending on your retirement and saving goals. You don’t have to give up everything, but putting a hard cap on this budget will help you prioritize.

3. Invest for Growth & Wealth Preservation

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Now that you actually have money to invest, where do you put it? It depends on your goals. At first, growth is going to be more important, but as you continue to save, your goals will evolve, and wealth preservation will become more important.

Protection: Hard assets like gold are some of the best ways to protect your wealth from uncertainty. Now is a great time to start investing in gold coins and bars, because the global economy is starting to show signs of weakness again. Investors around the world flock to gold coins and gold bars when they lose confidence in the stock market. Gold dealers like SilverGoldBull offer gold around the world at competitive prices online. It’s easy to compare, click, and get your investments.

Shares have higher growth potential, but gold has lower risks – including no third-party risks when you buy gold coins in physical form.

Growth: Shares and bonds tend to be the most popular investments when you’re looking for your money to earn interest or dividends. Shares will grow your earnings more quickly, but there’s more risk, whereas bonds provide a guaranteed interest rate. The difficulty with bonds is that inflation may outpace them.

Start saving money and investing it in assets that will help you grow and preserve your wealth.

Top 5 Money Management Tips for College Students

The poor college student: It’s a cliche in part because it’s so often true. The plight of most college students is that they go to school full time and usually only work part time. That means that they don’t have a lot of extra money to spend on much of anything. If you’re reading this, then it’s likely that you’re in this boat. Here are five ways you can make your money stretch further while you’re going to school.

1.Start by Making a Budget

For many new college students, going  to university is the first time that they’ve been asked to make a budget. In terms of keeping control of your finances, U.S. News and World Report puts learning to budget first on its list of college finance “must dos.”

A good college budget not only shows you how much money you have coming in from jobs, parents, and financial aid, but it also shows you how much you have going out. If you have more going out than coming in, then you will have a shortfall. 

Source:gobankingrates.com

Here are a few things that should go on your budget:

  • Rent
  • Textbooks and supplies
  • Food (if you’re not on a meal plan)
  • Laundry (soap, coins for the machines, etc.)
  • Transportation
  • Personal care items

2.Shop Wisely for Textbooks

With college books costing you as much as $1,300 a year, your school books represent a major portion of your college budget. 

The problem stems from the fact that the textbook publisher sets the price for the books and your professors order the books. However, the person ordering the books – that’s the professor – isn’t the person who has to pay for the books, so the price of your books affect your professors very little. 

However, the price of your books affect you a great deal. That’s when it pays to know how to buy textbooks on the cheap. 

First, try not to buy textbooks brand new. You’ll save a lot more money if you get used textbooks. You may save even more money if you rent some of your books or get them in Kindle format.

Also, be aware that your campus bookstore may not be the best place to buy books from a price standpoint. There are other booksellers, like Booksrun that buy and sell school books online. Check out options like these when cash is short.

Source:lllcf.org

3.Separate What you Want From What You Need

You might feel like you need coffee to get yourself going in the morning, but do you need a Starbucks coffee everyday? Do you need to eat lunch at the deli around the corner? Probably not. 

According to Nerd Wallet, splurges, like your daily coffee start to add up to the tune of a $1,000 or more a year. That’s where knowing what you want versus knowing what you need to get by is so important. 

If you’re not sure about which expense is which, then keep a money journal for four to six weeks. Record everything you spend money on. After a while, patterns will emerge. You will begin to see where you’re spending money. You may actually be surprised at how many splurges you find on your money journal pages. 

Speaking of splurges, you should also be mindful of how you use your credit cards if you have them. Don’t wait until the bill comes to start keeping track of your credit card purchases. Put those in your money diary as well. Credit cards make it easier to spend money mindlessly. You don’t see the money you’re spending leaving your hands, so it’s like it doesn’t exist until the bill comes in.

4.Work on Your College Breaks

Money that you earn and save on a job is less money that you have to borrow in student loans. It may be that you already work throughout the year. If so, keep that job during winter and summer breaks.

If you have a work study job, then find a job once school’s out. Put as much in savings as you can. It’ll be a cushion for you in the coming year. 

5.Get Scholarships and Grants

Source:educationconnection.com

Scholarships and grants save you a bundle of money because the more of them you get, the fewer student loans you have to take out. Having student loans to pay back means that some of your future earnings won’t be yours. 

Right now, the average student loan debt is almost $30,000. Since student loans cannot be discharged via bankruptcy, you’ll be paying back everything that you’ve borrowed until it’s paid off. In light of that, borrow wisely.

Final Thoughts

Although you may not have much money when you’re in college, these years also represent a great opportunity for you. Not only will you be getting an education, which could help you secure a job later, if you play your cards right, you’re also learning about how to handle money. 

Few experiences in your life will teach you as much about money as learning how to handle your money wisely while you are in college. During these years, you’ll really learn how to keep track of your money, how to cut costs, and how to make the money that you do earn count.

 

Careers In Finance: Which Path Is For You?

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How do you know what your call in life is? It is a difficult question to answer, and some people fail at finding their dream jobs spend their life doing something they never really wanted. However, you know what your interests are and based on them you can start looking for a job.

If you’re interested in accounts and consider yourself good at money management, a career in finance might be for you. Many people think these jobs are all about crunching numbers and handling money. But there is a diverse range of roles available in the industry. From corporate business to people-facing roles, there is something to suit any personality. Here, we explore several finance careers to help you work out if they would be right for you.

Accounting

source: roberthalf.co

Roles in accounting can be diverse. Generally, they involve managing financial records to check if businesses are making a profit or are at a loss. They then relay this information to those in charge of the business, providing advice on how they can overcome challenges or improve their finances. Accountants perform audits to establish this, as well as advising on tax, undertaking risk assessments, checking for fraudulent activity and managing money (to name a few).

Is it for you?

If you are good at analyzing data, performing audits and are generally well organized, an accountancy role might be for you.

Investment Finance

source: czechinvest.org

Working in investment finance primarily involves managing large amounts of money and valuable assets, such as property, for other people. These roles are client facing, so you need to be comfortable liaising with people to establish their goals. Typically, you would expect wealthy families, education establishments and large companies to be on your client list. Work may include finding potential investors or partners for your clients or organizing financial deals that will benefit them.

Is it for you?

If you are a people person and think you would suit a client-facing role, this could be for you. You must be able to communicate effectively to understand what your clients need and be comfortable pitching potential business opportunities.

Insurance-Finance

source: laoistoday.ie

The insurance industry is massive, so there are a few roles that might interest you. Firstly, insurance companies employ people to study the amount of profit they’re making. This involves analyzing data to understand how much money the company has following pay-outs to customers. This is then invested to further boost the company’s cash.

You can also work in the client facing side of insurance. This involves speaking to customers about the insurance they need and asking relevant questions to calculate their level of risk. You then would work out how much you would charge the customer for their insurance.

Is it for you?

source: bestcompaniestexas.com

If you feel confident offering advice to customers, making financial calculations and investing money, this could be for you.

These are just a few of the jobs types you may find in the finance sector. It is a great industry to pursue a career in, as pretty much every person or business in the world needs people to manage their money. Why not start looking for your dream job today?