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When it comes to improving your financial future, there are few things that are going to be as useful as simple, good common sense and knowledge of decent financial principles. You’re going to need those no matter what. However, tools can certainly make it a lot easier to make sure that things are going in the right direction. Here are a few that you might be able to make good use of.
One of the very first tools you should make use of (and should already have, by most accounts) is a budget. A budget is, simply put, a plan for where your money is going to go. You can look at your current budget by taking out your past bank statements and seeing, on average, where your money goes each month. This includes essential expenses such as rent, utilities, food, and so on, as well as discretional expenses, like nights out, treats, and subscription services that you don’t quite need but do like to use. You can then configure your budget, especially with the help of some handy budgeting apps out there, to see where your money should be going. For instance, a lot of people follow a 50/30/20 rule, which means 50% of the budget goes towards essential expenses, 30% towards discretionary spending, and 20% towards savings.
As the above paragraph implied, you’re going to want to put some savings aside no matter where you’re spending your money otherwise. If you’re spending all of the money that you make and none of it is going towards any future plans, then you’re simply not going to move the needle much when it comes to your financial health. This might mean saving for a home, for a new car, to start a business, or even to secure your future with something like an emergency fund. It can even be for short-term goals, such as saving for Christmas or for a wedding. Whatever it is, you need to plan for it, getting an idea of how much you need to save in total and how much of the total you can pay towards it each month.
The Pay Yourself FIrst model
Related to the two tips above, the Pay Yourself First model is a strategy that puts your financial focus on those goals that matter most for the future. When you first get paid and you’re thinking about how your money divides up into your budget, it might be a natural reaction to spend the money you can first, then set aside what you can save later. However, this leaves you open to the possibility of overspending and, as a result, this will lead to it happening more often. When you Pay Yourself First, you set aside the money necessary for your financial goals before you start spending, making sure that, no matter what happens, you don’t blow through the money that’s vital for your long-term financial future.
Expense tracking apps
Of course, you can have all the plans that you want. If you’re not able to stick to them, it’s not going to matter all that much. As such, you need to make sure that you’re keeping your finger on the pulse of what your money is doing and where it is going. Rather than going through several days of spending and then checking your bank balance, you should make use of expense tracking tools that you add reports to as you spend. This way, you can see exactly what you’re spending and most apps will allow you to categorize expenses so you can see how your expenditures fit in with your planned budget.
Automatic updates from your bank
You will be able to manually use a good expense tracking tool so that every time you put a purchase through, you can record what it is and how much it was. However, there are expenses that can be all too easy to miss. This can include any regular spending that you have set to come automatically out of your bank, as well as any payments through payment portals like PayPal since they tend to be a touch delayed in how they come from your bank. However, most banks that have banking apps also have features that allow you to get notifications of when money comes from these apps. From there, you can make sure that you are accurately recording every charge.
It might not be a tool in that it’s an app or piece of software like some of those recommended above. However, credit is, indeed a tool, since it allows you to access capital. The better your credit score, the better your ability to get that capital and the less you’re likely to have to pay back in interest or fees. If you have no credit history, you might not know where to go, but short term loans for bad credit can help you start building the credit history that you need to be able to borrow more in the future. You should also make sure that you check your credit report at least once a year for erroneous reports or credit agreement problems that you have yet to address.
Bill tracking apps
With the automatic updates from your banking apps, as mentioned above, you can make sure that you don’t miss any payments that go out from your accounts. However, that’s not the only danger when it comes to things like billing. If it’s manual billing, then forgetting when it has to be paid in can result in you being late, which will likely come with fees and will definitely affect your credit score. Otherwise, even if it’s an automatic payment, you should use bill reminder apps to give you some warning ahead of time. You want to make sure that you have enough money in your account and that you’re not going to be taken below your available balance.
Not only can you track how much that you spend, but you can also maximize the savings that you get by making sure that you get the best deals available. This will not be available everywhere. For instance, you might not be able to track down sales when you’re physically in a store, but discount finding apps can help you scour the internet for not just savings, but voucher codes and other deals when you’re trying to buy something specific. These tools always come with a trade-off. Some might ask for a small fee but, in most cases, they’re going to ask for your browsing and buying data, instead. This might not be a deal-breaker but it is important to know what you’re getting into.
A plan to invest
One savings goal that people tend to put off, but really shouldn’t, is the savings necessary to get started on investing. Anyone with wealth will tell you that good wealth builds on itself. You should get your money working for you and one of the best ways to do that is to look for online investment platforms that allow you to get started with your own portfolio alongside investing advice to help you learn the ropes. There are no guaranteed gains with investments, especially in things like stocks. However, you can maintain a portfolio to make sure you get exactly the level of risk that suits your purposes and your financial goals.
Again, these tools are not going to do the work of being financially responsible and forward-thinking for you. You’re going to need to work with them to make the best outcomes happen. But they sure can help a lot.