As you become a little older and are ready to be on your own, you will need to learn how to handle your finances. Misuse of money can be costly and may take a while to regain your reputation as a financially responsible person. People who use their money wisely, however, are often rewarded well for it, making them glad they did.
Growing up! 5 Things you Need to Know about Managing your own Money
1. Start Saving Money Right Away
One of the most valuable lessons about money you can learn is to plan for the future. Saving money takes time, and it takes a long time to save a lot of money. Put aside about 10 to 15 percent of your income into an account that will earn interest. You will want to create a short term savings account, and a long term one. The long term account is for larger purchases you want to make later on, for things such as a car, a trip, or a house.
2. Save Money by Paying Cash
If you use credit to pay for your purchases, be aware that you will probably end up paying more for it than if your paid cash. Saving money to pay with cash for larger items is an excellent way to use money wisely. Using credit to get in debt is a hard lesson because it can take a long time to get out of it.
3. Develop a Budget and Keep to It
Take a little time to determine what your monthly expenditures are and your monthly income. After all your bills are paid, figure out how much you have left each month for discretionary spending money. Your amount for savings should be considered an expenditure, and not an option, so that you are always saving some money. Now that you know what is needed to live on, spend less money each month than what you earn.
One important way to keep track of your expenditures is to use checks. As long as you make the appropriate records in the checkbook as needed, you will have an accurate record of where much of your money is going each month.
4. Shop Around and Comparison Shop for Better Deals
When buying things you do not normally buy, avoid buying on mere impulse. Most items will go on sale sooner or later, and you will save money if you buy when on sale. You might also do some comparison shopping, which means that you compare prices at two or more places before you buy the least expensive one. This can easily be done online. Using coupons for food purchases also makes good sense, because it will make your money go further.
5. Use Credit Cards Wisely
Once you get a credit card or two, it is important to realize that it can either be a very useful tool, or it can really hurt you. The only best way to use a credit card is to pay the bill in full when you get the monthly bill. This way, you will not pay any interest, as long as the bill is paid promptly. Most likely, all your cards report to the big three credit bureaus, and how well you manage your money will be revealed to anyone you apply to for credit – called your credit score. This score will be the basis for the amount of credit (loan) you can get, the interest rate, and how long you will have to pay it back. If you already have debt, Forbes says you need to commit to getting out of it fast, and staying out.
Managing money well helps you sleep better at night. It also lets you get more for your money, and enjoy life more without worrying about debt.