Personal finances and money management can feel like daunting terms — easier to ignore or procrastinate rather than navigate. Talking about money, in general, can raise our anxiety, especially if we haven’t yet developed the experience needed to make our money work in our favor.
The truth is that money management is easily accessible, so long as you have the appropriate tools and mindset. With these five simple tips, you can make the smartest spending and saving choices for your present and future self.
Streamline Your Budget
Adding up numbers and going through expenses doesn’t have to be the long, boring process it used to be. Using budgeting apps is the modern way to consolidate your finances in an accessible and efficient way. Budget apps have been found to help significantly reduce spending —and the competitive market means there are apps for every type of saver.
If you rely on payday loans or other short-term lending, these apps will help you pay off the debt quicker. While some online lenders offer secure and safe borrowing options, remember to only rely on this type of borrowing for emergency needs, and also remember to pay off the interest as soon as possible.
Invest as Early as You Can
Building wealth will come easier the earlier you’re able to begin saving and investing. When you invest in the early stages of your financial planning, you’ll benefit from increasing growth over a longer period. As the market fluctuates, you’ll be in the position to handle the ups and downs because you aren’t looking to withdraw those funds right away.
If your employer offers contributions to your retirement plan, commit to setting aside as much as possible without taking away from your expenses. Additionally, these contributions are taken directly out of your paycheque, so you won’t even notice it’s missing.
Try the “Cost Per Use” Approach
Before you make a purchase — such as an article of clothing or a piece of sports equipment — try the cost-per-use method. The concept is simple — dividing the cost of the item by the estimated number of times it’ll be used. This method is designed to help you make smarter spending decisions, based on how the item will serve you against how much it’ll cost.
Think of these purchases as investments. This is an opportunity to identify wasteful spending and ensure whatever item you’re treating yourself to is going to maximize its return.
Say No to Overdraft
If you have an overdraft protection attached to your chequing account, consider removing this potential pitfall. The idea of overdraft is to allow you to spend money that you don’t actually have — once you’ve been paid your overdraft is paid off first and you’re left with significantly less in your account. While it may seem like an easy solution in the short-term, it’s actually going to tempt you to overspend.
Find the Right Savings Account
We all know how important it is to have savings, especially a dedicated emergency fund. Your savings should be earning you money even as it stays untouched. The most effective accounts will earn interest, and should be convenient and free of any withdrawal fees.
Whether you’re interested in high-yield or traditional savings, your chosen account should reflect your needs — do you want a seamless app experience, or is ATM access a priority? Choosing the account that matches your financial needs is only going to help keep you on track.
Hopefully these 5 tips will help you on your way to true financial freedom.