This Is How to Manage Your Money Better

According to a study by the National Endowment for Financial Education, only 24% of young adults showed basic financial literacy.

This statistic should terrify you because financial literacy empowers you to make smart money choices. Without this knowledge, you may not be able to save money for an emergency or make large purchases.

But regardless of your age, you need to know how to manage your money better. That’s why we’ve created a guide to help you prepare for your financial future.

Know Where You Stand Financially

Before you can understand how to manage your money better you need to know where you currently stand. One of our most simple money managing tips is to honestly analyze your income and expenses.

Collect data on your current financial situation. A good way to do this is to keep receipts for a month.

This can help you get a clear picture of where you’re spending outside of major things like bills and rent. It can provide an honest look at where you’re wasting money.

Budget

One of the most helpful tips for managing money is to create a realistic budget and stick to it. The key to creating a realistic budget is carefully tracking your expenses, as well as planning for unexpected expenses and leisure activities.

Set up a Rainy Day Fund

Right now over 41% of Americans couldn’t cover a $1,000 emergency with their savings. This means that most people are only one financial disaster away from being in serious debt.

This is why after you’ve created your budget you need to set aside a certain amount of money each month to prepare for an emergency. The ideal target is to keep around 4 to 6 months of living expenses set aside for any emergencies.

Pay off Your Debts

Debt can take a toll on young earners financially and emotionally. If you have too much accumulated it can prevent you from reaching your financial goals. After you have money saved for an emergency the next step should be to pay down any lingering debt.

Set up a Retirement Fund

In the future, you may have to retire or take a leave of absence from work. Unfortunately, social security may only pay part of your living expenses. This is why you need to set aside a significant portion of your income to prepare for retirement.

You may have options like a 401(k) set up through your employer or Roth IRAs that help you save independently. You need to plan out how much money you’ll need for living expenses in the future.

Ask For Help Learning How to Manage Your Money Better

Even if you follow all the advice we’ve laid out you may still have larger financial issues that you can’t deal with alone. This is when it’s time to reach out by finding a financial advisor to offer help managing money.

The job of this wealth advisor is to help you prepare for your financial future. Hiring a wealth advisor can help you plan for retirement and save for your education.

Want More Finance Advice?

Learning how to manage your money better means taking a look at your current financial situation, creating a budget, and preparing for the future.

If you want more advice on how to achieve your long and short-term financial goals then check out our blog.

Wealth Creation and Saving Strategies | OnMoneyMaking