To achieve financial success, you must be able to track and save your money. In fact, good money management skills depend on the smart financial habits you make, whether you actively budget your money or not.
Having a clear understanding of your financial goals and spending habits is essential, and tracking your money and finding ways to adjust your finances according to your goals should be a priority. If you need help changing your financial behavior and future, then read this advice on how you can track and save your money.
Establishing an Emergency Savings Fund
You need to consider your financial priorities. These will be unique for everyone as everyone spends and saves differently, but some basic budgeting elements, such as an emergency savings fund, should be present in everyone’s financial priorities. Your emergency savings refers to the money you and your dependents would survive on if your current income was terminated for any reason. In your budget, you are encouraged to allot three to six months of your total living expenses into your emergency fund. If you have no money saved in an emergency fund, then you are advised to begin with a goal of adding at least one month of your living expenses to your emergency fund. However, recommended estimates for savings funds may vary based on your financial situation.
Various methods can be used to ensure you obtain enough money in your emergency savings funds. Though, you always want to make sure you create a realistic timeline for each deposit, which should be determined by the remaining funds you have after you pay all your necessary expenses each month. Opening a separate bank account for your emergency savings fund can help you maintain your financial goals. Still, if you can only manage to deposit a small amount into this account, you can think about other creative ways to directly deposit money into your emergency savings fund. For example, tax refunds and work bonuses can go straight into your emergency fund.
Easy Tips for Saving Money Every Day
Saving money can be easier, if you have the right tips and tricks to help you. These tips can help you save money on daily or large purchases, but only if you know your financial situation. If you do not, then review your financial information to better understand your financial well-being or limitations.
The first tip involves cutting back on using your credit card for purchase. Using cash allows you to see exactly how much money you are spending without having to pay off a balance later. Additionally, you are less likely to overdraw your credit account if you are more aware of your financial assets, like cash. However, if you choose to continue using a credit card, then you may benefit from automating payments and applying awards points given to you for paying down your balance on time. The points may even be transferable.
The second tip encourages you to cancel some digital and paper subscriptions you may not be using. The third tip is for homeowners, specifically those with mortgages. They may refinance their mortgages to make payments more affordable or to pay down their mortgage quicker. Finally, if you are really struggling to find extra spending money, or money to add to your savings or financial goals, then getting a second job may be advisable. A part-time position can offer you flexible hours and a regular paycheck.
Developing Better Money Habits
The way you deal with money and budgeting affects your ability to save and track your money. Adjusting your money habits, including your spending and saving behaviors, can help you meet your short-term and long-term financial goals. Additionally, it can permanently change the way you manage your funds. Good money habits are outlined below:
- Investing in yourself. After paying off the necessities, investing in yourself should be the first thing you do. You may want to put your money in a high-interest-yielding savings account or invest it properly.
- Avoiding frivolous spending. Do not spend all your money on entertainment or food.
- Budgeting with actual numbers. Aiming for an actual number can make budgeting seem more feasible.
- Limiting costly behaviors. Eating out, driving to nearby destinations and partying can be expensive. Try to limit these activities when you can.
- Believing that you deserve money. If you do not believe you deserve money, then you may not receive it. Act like you can handle larger sums of money, and then do it.
Courses held online or in-person can be great if you are still unsure about how to change your money habits. Courses can discuss what makes some habits harmful to your financial well-being and suggest alternative actions you can do to save money and start working towards your personal financial goals. Developing better money habits gives you the opportunity to contribute to your financial independence and discover ways you may not have been contributing beforehand.
Ways to Track Your Spending
Tracking your spending is the only way to estimate how much you should be budgeting. Tracking methods include the following:
- Traditional tracking methods. You can write down all your purchases in a notebook or excel spreadsheet or utilize the pre-budgeting method involving putting cash into envelopes for different spending purposes before you make a purchase.
- Technological tracking methods. If you already use credit and debit cards to make most of your purchases, whether online or in-person, then you can simply download your banking activity as needed from your account. Additionally, financial tracking apps can help monitor your spending and even offer you helpful suggestions on how to improve your financial situation based on the information you provide.
- Professional tracking methods. Professional finance consultants or finances courses may be great if you feel like you need more personalized and formal assistance with your financial tracking. While this method is not free, it might be the best way for you to ensure your finances are in order.