Whether you’re living month to month, or just don’t know how to reach that next level of financial success, you’re probably interested in learning how to get better with money. And this is the right mindset needed to break through any money plateaus.
The good news is there are 5 simple steps you can take to get on track towards your financial goals.
So let’s get started with the steps that will teach you how to get better with money and accomplish all of your financial goals to live the life you really want.
Step 1. Write Everything Down
The best way to unclutter your expenses is to have them out in front of you. Grab a notebook or use your computer and start by writing out all the expenses you have every month.
Separate them by categories. For example, food, bills for your utilities, transportation, and don’t forget entertainment.
You can also separate recurring payments and unexpected expenses. It may take a month of writing down everything and keeping receipts you aren’t used to keeping, but that’s okay. It gets easier when you already have a solid grasp on where your money is going.
Okay, now that you know exactly what your monthly expenses are, it’s time to factor in your income. Is it greater than or less than your expenses? Clarity of your financial situation is the first step towards better habits. And congratulations. You have created a budget and now you have a target amount of income you need to make to cover your current expenses.
Step 2. Establish Your Savings Goals
Give your money a purpose and create a plan for it. Write down what you want and how much it will cost. Is it a down payment for a house, paying off your credit card debt? Maybe you’re saving for retirement down the road? You can set longterm and short term goals, but make sure you include how much it will cost. And when you will want to be able to pay for it.
Think backward from your dreams and find out how much money you will need per month to meet each goal. With the dollar amount you need monthly in mind, you can then ask yourself, how you can save enough income each month to meet these goals and you’re on your way.
Step 3. Minimize Your Expenses
There is no such thing as a completely perfect budget. We all have to make choices when it comes to spending that are personal to us alone. An easy way to cut down on expenses is to take a look at things you really don’t need, or you really do want, but you can do without.
Prioritize your expenses, starting with what is absolutely necessary down to the services or things that you hardly use. Use your savings goals to determine where your priorities are and start with what is easy and challenge yourself to lean down even more over time, just like that we’re taking back control. Feels pretty good, doesn’t it?
Step 4. Make Your Money Work For You
So we’ve got goals now. We know how much to save monthly and we’re no longer paying for multiple streaming subscriptions. We just have one. Some of that money could be going into your bank account, but not all goals are equal and your money could be working harder for you in a different type of account.
Your money should work toward those long-term goals. Through investing. There are many options, but take the time to explore which ones are just right for you. Many of these options, such as CDs, mutual funds, bonds, stocks, IRAs, and various securities lock in your money for a fixed time at a higher rate of interest than your savings accounts. Consider investing your money to achieve those long-term goals even faster.
Step 5. Automate and Reassess
Sometimes learning how to get better with money is simple, but not easy. Especially when learning new habits. Luckily, in the modern world, there are many helpful tools and resources to make it easier. Many banks can make automated monthly transfers to your savings accounts for you. For budgeting, you can use a premade spreadsheet or a money tracking app. And with investing, there are even more options to diversify and make your money work. Be sure to use these resources, if an automated or electronic strategy works best for you.
Lastly, make sure you reassess your financial situation monthly. As you accomplish goals, you should set new ones. And for the goals that you aren’t accomplishing yet, find out where you’re falling short and set more realistic goals. Don’t expect to have it all figured out right away. Just be willing to keep reapproaching your finances determined to do better each month.
So that’s that. You now have five simple and actionable steps on how to get better with money. If you found this article helpful, please share it with a loved one and take a moment to subscribe to the newsletter.
I’ll leave you with just one question today, which of these steps did you find to be the most helpful for you and why? Let me know in the comments below and feel free to ask any questions that you might have.
Until next time. God bless!
Judy Copenbarger is the Founder and President of Comprehensive Financial Services, based in Irvine, California.
She holds a Juris Doctor Degree, with a Taxation Emphasis, is FINRA Registered and maintains various Securities and Insurance Designations. Her professional expertise is in Estate Planning, Retirement and Education Planning.