Tips on Managing Your Money

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You may have finally decided to get a handle on your finances, but it’s still hard to know where to begin. You may not have experience learning when you were growing up because plenty of families don’t talk much about money, and schools often don’t teach courses in personal finances. There’s a taboo about talking about money with friends and colleagues as well, so while it can look like some people you know are doing very well, they might be struggling with debt and overspending behind the scenes. The tips below can get you started on managing your money and charting a responsible financial life.

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Create Your Budget

Your budget is all about what is coming in and what is going out. You probably know your income, but you might not really know what you are spending. Most people end up making unrealistic budgets if they try to do so without tracking their spending first. It’s easy to figure out what you are paying for rent and other regular bills, but what about how much you spend on food and entertainment? The good news is that there are apps you can use to track your spending painlessly over a few months. You’ll likely see areas where you can cut back. You need to include paying off any debt you have and saving in your budget as well.

Paying Your Debt

You should be making an effort to aggressively pay off any debt that is not your mortgage. In most cases, your credit card debt is the most important to tackle because of its high interest rates. However, if you are like many people, you are also paying off substantial student loan debt. You might want to consider refinancing your loans. This can give you lower overall monthly expenses and a lower interest rate, which may help you pay the loan off faster.

Emergency Savings

To avoid rebuilding that credit card balance that you’ve finally managed to pay down, you need emergency savings that covers a few months of expenses. With an emergency fund, you can handle unexpected car repairs, medical co-pays or the sudden need for a new appliance without facing disaster or having to pull out the plastic. When you have to spend out of this fund, just work on rebuilding it afterwards.

Retirement and Investments

Your first stab at investing should be putting money in a retirement account, either the one sponsored by your employer or one you set up yourself if your employer doesn’t offer one. Employer-sponsored accounts are usually excellent opportunities to save and often come with such benefits as matching funds. Once your debts are paid, you have an emergency fund and you are contributing regularly to your retirement account, you might want to look at making additional investments. An easy way to do this is with a brokerage account that you set up online with a roboadvisor investing in exchange-traded funds or mutual funds. Although you won’t get rich overnight using this method, it is a hands-off and reasonably low-risk way to grow your wealth.

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Tips on Managing Your Money
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You may have finally decided to get a handle on your finances, but it's still hard to know where to begin.
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