How To Manage Your Home Finances Like a Pro | 7 Helpful Tips
One of the most important financial decisions you’ll make is how to manage your home finances. This can be a terrifying task and very overwhelming for a lot of people.
However, nobody knows your home finances better than you, and the only way to make all of your dreams come true is to start with a plan, a financial one! To help in this endeavor, here are 7 helpful tips to get started.
Make a List of Bills and Expenses
This is the first and most important step in managing your home finances. It’s important to have a solid understanding of your overall spending habits so you can create a realistic budget that reflects your needs and wants.
In order to do so you’ll need to gather every single bill and expense you have throughout the year. This will include your monthly expenses, everything from mortgage payments to groceries to cable TV subscriptions. You’ll also want to include quarterly and annual bills, such as online subscriptions, car insurance premiums, and gifts you purchase throughout the year.
Establish a Budget
Once you have a list of all your bills and expenses next you’ll want to create a budget. Knowing what you can afford and sticking to that budget will help you stay within your means and save money.
Now, you’ll want to try building a budget for the entire year. However, if this is too overwhelming when you’re first getting started at least create a budget at the beginning of each month, so you’re not scrambling at the last minute and end up overspending. Then over time you’ll be able to create an annual budget.
There are many tools that will help create a written budget easier. Tools like different software programs in addition to money-tracking apps like Mint or Personal Capital, which will keep track of where your money goes each month.
Cut Unnecessary Spending
As you create a budget you may quickly realize you spend more money than you make each month, so cutting expenses will be a must.
Many expenses that don’t need to be paid each month can be eliminated by looking at your budget and figuring out where there are cuts that can be made. This includes things like eating out frequently or going out on weekends, as well as unnecessary items like clothes that never get worn or electronics that are seldom used. There are also several ways to save energy at home, which can reduce your utility bills.One of the most important financial decisions you'll make is how to manage your home finances and this guide will help you do so like a pro! #managedebt #howto
Consider New Financing Debt Carefully
There are pros and cons to taking on debt, so it’s important to weigh the benefits and risks before making a decision. Make sure you understand the terms of any loans you take out, as well as the interest rates involved. While paying 12% interest for a car loan as opposed to 3% may not seem like a big deal, but over time it can cost you thousands of dollars, which could be going towards your savings account or a retirement fund.
So before signing on the dotted line ask yourself if you need to take out this loan. If the answer is yes, do you need to spend the entire amount? Just because you get approved for a $60,000 car loan doesn’t mean you should purchase a $60,000 vehicle especially if you have other debt and little to no savings.
Save for a Rainy Day
A rainy day fund is a savings account set aside specifically for unexpected expenses like home repairs, medical bills, or lost income. Make sure the account has enough money to cover at least three months of expenses, and regularly transfer any extra money into the account to help build it up over time.
With that being said your budget may show you won’t have “extra money” after paying bills, but saving money every month needs to be a priority. Therefore, if you have an “entertainment” fund on your budget you’ll want to cut it and apply the money towards your rainy day fund until you have a healthy savings account.
Keep Your Credit Rating in Check
Having a good credit score can substantially increase the chances of approval for a loan or lease, as well as potentially reducing interest rates for car loans, mortgages, and other financing opportunities.
Those who possess a lower credit rating have the ability to take steps to improve it. This isn’t something that should ever be put off because it can take months and in some cases years to improve your credit score.
One of the easiest ways to start improving your credit is by paying bills on time. So you might want to consider setting up automatic payments for bills and debts. Automating payments can help you stay on top of bills and debts, and avoid any late fees or penalties that could result from unpaid bills later on.
Ask for Help When Needed
If you find that your budget is starting to get out of control or that you are struggling to meet your monthly obligations, don’t be afraid to reach out for help. There are many resources available, including online forums and financial advisors.
In some cases seeking out a credit counselor will be in your best interest. These agencies can provide guidance and support as you work to improve your credit score and save money on bills and loans.
Unfortunately, how to manage money or establish an excellent credit score isn’t something most of us are taught in school or by our parents, which is why so many young adults are starting their adult life with poor credit, maxed out credit cards, and student loans they can’t afford.
However, not knowing how to manage finances and being in debt isn’t something only young adults face, it’s something we’ve all faced. So regardless of age if your finances are a mess and you have debt you’ll need a solid plan to get out of it and step one is learning how to manage your finances.
While this article is great and offers money management tips for adults and money management tips for beginners sometimes it may not be enough. So if you are overwhelmed with your finances and don’t feel it’s a task you can tackle on your own there is nothing wrong with saying I need someone to manage my money. However, for those of you who are confident this is a task you can handle this guide is sure to help.
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About the Author
Top Wellington Realtor, Michelle Gibson, wrote: “How To Manage Your Home Finances Like a Pro | 7 Helpful Tips”
Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.