Five ways to increase your finances!

Do you need to fix your budget, so your checking account doesn’t look like this? See if these tips can help.

Money management is an important skill for everyone to have. It can be difficult to learn to manage it with all the different tips and tricks on the internet. So instead of having to weave through the hundreds of overly complicated bad advice, this article is going to boil it down to five sensible tips. So if you’re for looking for reasonable ways to budget, save, and learn the basics of investing, whether you’re ready to look into your first credit card or you’ve never seen a savings account.

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1. Budgeting Goal

The hardest part of starting a new habit is taking the first step. Creating a goal can be an incentive to start your money management journey. Your goal should fall into these categories.

Specific

Measurable

Attainable

Relevant

Time-based

Setting SMART Goals

Whether your goal is to save $1000 per month or save for a vacation at the end of the year, it’s important to follow the SMART goals so you don’t feel disappointed when you don’t achieve your goal.

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2. Figure out your wants and needs!

The first step is to see where your money is going. Determine what your wants and needs are. Needs can be seen as your necessary expenses like groceries, rent, or car insurance. These are the most crucial expenses because if you can’t afford them, your life can go downhill pretty quickly.

Spending your money on daily Dunkin Donuts coffee, expensive designer bags, new technology (when yours works fine), or eating out excessively are examples of things you want. Wants are things you can live without even though they are nice to have.

Once you figure out which expenses are needs and which are wants, you can figure out what you want to do with what you have left over. If you are in the negatives, that means you spend more than you make and you need to go back and review your list of wants and needs. Can you reduce some of your wants? For example, do you need 5 streaming services and do you need to eat out all the time?

Another tip for saving money is to go thrifting if you like shopping, set a budget every time you eat out, and if you’re a coffee lover like me, try making coffee at home! If you’re someone who likes to buy the newest phone, you can check out reliable second-hand sites like BackMarket or Apple Refurbished for more cost-efficient options.

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3. Open a savings account.

Now that you’ve determined your needs and wants, aka a budget, hopefully, you have leftover money for savings. Savings are important for your future wants, like a car, AirPod maxes, or a vacation. Having a savings account can help you stay out of debt, especially if you’ve started saving at a young age. Even if you only put in a small amount every year, it’s better to start an account sooner rather than later.

One helpful tip in figuring out how much money to put in your savings account is to follow the 50/20/30 rule. This rule essentially has you splitting up your money into percentages; 50% goes towards your needs (like rent, food, etc), 30% goes towards your wants (like coffee and streaming services), and 20% should go into your savings.

You can find more effective money-managing tips at https://campuspress.yale.edu/ledger/12-money-saving-tips-everyone-can-manage/

50/30/20 Budgeting Rule and How to Use It.

4. Be wary of Credit Cards!
Having a credit card is a big responsibility that you should take seriously. Make sure you only use it when you know you can pay the full balance off the following month so that you are not charged interest. Interest is when the bank of the credit card charges extra money for extending credit. It’s so easy to get into major debt with credit cards and other loan products like Klarna and AfterPay. Ruining your credit will ruin many opportunities like your chances of buying a house or taking out a loan. A good credit score is in between 720-850. If your credit score falls below this range, you can bring it up slowly by paying off small amounts each month.

5. Investment accounts
Investment accounts are a good idea if you want a long-term savings account. The best investment account to start with is a basic brokerage account. A brokerage account is like a bucket that can hold different investments like stocks, bonds, ETFs, and mutual funds. You can use apps like Fidelity or Acorn to start.

If you’re a minor you can use Fidelity Youth to be introduced to various financial topics with the lessons and interactive activities offered. If you’re ready to start buying shares of stocks, I would suggest you start with mutual funds. Mutual funds let you put your money with other investors to mutually buy stocks, bonds, and other investments. They are run by professional money managers.

Although these tips can be great ways to manage your money, you should know that these tips may not be ideal for everyone. There are many contributing factors to the way you use your money. If all of these don’t work for you, try picking and choosing the ones that do. It’s also a good idea to research more about financial literacy and workshops like these to make sure you choose the best way to save for your own habits and financial situation.