Personal Finance Tips

Some simple personal finance tips can be very effective in helping you save money.

Do you sometimes wonder where all your money goes?  If you, like so many others, tend to run out of money before you run out of month, you probably need a financial overhaul.  All you need to take control of your finances is a small investment of time and an honest conversation with yourself.

To take control of your finances you first need to know what your expenses are.  You might know how much you pay for utilities, your rent or mortgage, and other needs like auto insurance and a car payment.  So why is your bank account running on empty between paychecks?  The answer is that you have expenses that chip away at your funds but which you don’t consciously recognize.

We all have little costs every day that we rarely include in our budget.  The coffee you buy on the way to work, the sandwich you pick up at the mall or the unexpected lunch invitation from a co-worker can eat away at your budget.  Save your receipts each day for at least two weeks without altering your spending habits so you can find out where your money is going. 

If you decide that those expenses are necessary, allow for them in your budget.  When you have a realistic picture of how much you spend you will be one step closer to taking control of your money.

One thing you absolutely must include in any budget is savings.  You may not think you have enough money to save but even putting aside a dollar a week will help you get closer to your goal of financial security.

Another pitfall for many people is their credit cards.  It’s so easy to whip out that plastic and use it to pay for items you need or just want but when the bill comes you may be shocked at how large it is!  This is because you are letting the credit card control your spending habits, not the other way around.  If you’re tired of such nasty end of the month surprises you can put a stop to it. 

An easy way to take control of your credit card spending is to treat every purchase as a debit.  When you use your credit card for a purchase, enter it in your checkbook and subtract it from your balance.  Use a red or purple pen to make it stand out.  When the bill comes, tally up those charges and add them back into your checking account balance. 

You will never be shocked at your credit card bill again because you’ll have a real running balance of how much money you have available; you will have already “saved” up all the money you need to pay your bill in full.  If you are running a large month to month balance this will keep you from adding to it and you’ll be able to pay down the balance faster.

Next, take stock of your assets and your liabilities.  You can’t control your finances if you can’t see the whole picture.  Use your budget as a tool that helps you manipulate your money to pay off outstanding debt.  Your budget is like a road map to success—it allows you to see where you want to go and how to get there. 

Taking stock also helps you prepare for the future and plan for it.  You can use your budget road map to plan for vacations, big events, retirement, and college for the kids and other important expenses.

By creating and sticking to a realistic budget, savings plan, and using the simple finance tips in this article, you will be in control of your money instead of it controlling you.  This is the first step to financial independence and security.

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