Common Money Management Mistakes
Saving money is never easy no matter how much self control you have, there is however a few step you can take to get your financial health on track so you can save for the future.
Lack of reserved cash
A healthy financial plan calls for a personal to have cash in the amount of half a year’s annual salary put away in case of emergency. To put that away, on top of your long term savings means you have to be very careful with every dollar you spend and make a life long habit of restraint. There is always something unexpected that comes up, in some cases the financial strain can be intense. For example, if the primary earner looses their job or becomes ill, you will need a reserve to pay bill until things normalize. Lack of a cash reserve can easily throw your family into sinking debt that takes years to correct. A cash reserve will give you a calming sense of peace along with added security.
Not setting up a spending plan
If you find that you have no money at the end of the month, and you can’t seem to figure out where it went, chances are you need to put yourself on a spending plan. Daily small purchases quickly add up to a lack of savings. Making a spending plan allows you to set limits, use your budget carefully, and attain your savings goals with little or no guilt. To start, you need to create a long term goal; it can be anything from saving $5,000 per year to opening a retirement account. After you identify your goal, then plan a spending budget to reduce your frivolous expenses and increase your end f the month savings.
Over reaching credit lines
Credit is essential to financial health, but too much credit is equally harmful. Most consumers use much more credit than needed on items that should be purchased outright. This leads to higher payments and a reduced amount of savings. Not all credit cards are the same either, many cards have low to no interest charges for the first year, only to jump to higher rates after the first 12 months. Some cards also have annual fees regardless of how well you manage your payments. Understanding your monthly payment expectations as well as the after interest cost of the items you buy with your credit card will help you determine if the purchase is really worth it, and if it fits into your monthly budget. Paying at least the minimum is the best way to secure your good credit rating and leaving at least half of your available limit unused is a good way to show the credit card company that you can use your line of credit in a reasonable manner.
Ignoring the small change
Saving money is a long term plan for your financial health, just because you don’t save large chunks of cash at a time doesn’t mean that you aren’t working toward your future. Small amounts add up over time, even the largest mountain is simply made up of smaller stones. Your savings is the same way, putting away $20 a week for savings will total out to almost $1,000 per year of tax-free savings. Invest that into a mutual fund or retirement account and watch that small change turn into a large pile of savings ten years from now.
Online Tools to Help Manage Your Spending
Controlling your spending requires a sound budget and self control, in most cases if you add a program to track your spending you will have a better chance at successfully managing your finances. Just about everything can be found online these days, money management tools are no exception, here are a few affordable online tools to help you manage your spending.
The name is certainly attractive; and it allows you control your personal finances as if you owned a mint. The site has gained popularity in recent years by being user friendly and offering a large amount of automation tools. You can link all of your credit card, bank and other financial accounts making them easy to control from one place. This also allows you to track your expenses more accurately with their budget and projections tools. This free tool is a favorite among all age groups and it allows you to really see where your money goes so you can make better spending choices.
Yodlee Money Center
If you use any other online site to manage your finances, you are already using the Yodlee system, simply under a different name. the service is free and removes all that fancy packaging that some of the flashier site have. If you want a no nonsense way to analyze your expenditures, get bill reminders, generate a budget and more, then this is the program for you.
Concerns with online security is the main reason most people shy away from web based banking services, Buxfer offers a totally secure way to link all of your financial accounts into one easy to use interface. You can set download times and sync options to help you stay updated without traversing all over the internet. The online service is very affordable with the most comprehensive package only around four dollars per month.
Clear Check Book
The is exactly what the name implies, only online and beefed up to allow you to track your spending from any mobile device. You can create projections, and created a budget for only five dollars a month. There are modules that you can use to input purchases as you make them no matter where you are, this is a good way to track those “little” unplanned purchases that can through your spending plan out of whack.
With this online money management program, you pay quarterly. The program allows you to budget the old fashion way via a new medium. You are able to use online envelpes to allot set amounts of money for each type of expense; you can pay bills automatically, adjust your budgeting goals, set restrictions on spending and generally grow your wealth through healthy management. You can link all of your accounts in their secure system which allows you to accurately track and pay bills with the click of a mouse.
All of these tools work on secure servers with the highest amounts of encryption, this lets you rest easy about the safety of your identity and other sensitive information.