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Why Smart Money Management Matters

Closeup of rolled United States five dollar bills tightened with red rubber band

Many people have trouble managing money. Unfortunately, this can lead to a lifetime of doing without. It can also cause them to accumulate an enormous amount of debt, leaving them trapped living the paycheck to paycheck lifestyle. 

Does that sound familiar? 

Piles of bills on a table and no means to pay them can cause excessive amounts of stress. As a result, you put your overall health at risk. That could lead to you not being about to focus at work or home and you could fall into a state of depression. Stress can also lead to heart problems, anxiety and other issues.

If you have an issue managing your money, there are several steps you can take to improve your situation, achieve healthy finances and a better quality of life. 

A Household Budget

You’ve probably heard it before, but you ignored the advice and did without a budget. In your mind a budget might mean “sacrifice,” however, the opposite is true.

A budget brings awareness to your finances allowing you to make positive changes such as switching to more affordable solar energy or buying cheaper groceries. It accounts for all your bills and expenses, eliminating surprises and reinforces savings. If you want to remodel a room, you allocate money each pay period until you have what’s necessary to complete the job. Before you know it you’ll be doing a “carpentry contractors near me” Google search and making your dream a reality.

Reeling In Debt

A common problem that can come with not using a budget is excessive debt. You buy until you have no money left to purchase anything else. Unfortunately, by the time you realize the enormity of the situation, you’re drowning in debt. Thankfully, there are a few ways to reduce it quickly. 

You can choose the debt with the highest balance and/or interest rate then pay that off first. Conversely, you can make payments on the lowest balance to get rid of it, then move up to the next biggest balance. Do that until you are out of debt. If you owe a lot of money in credit cards, think about getting a consolidation loan or help from a company link Strategic Debt Consulting to roll everything into one easy monthly payment. 

Adopt the Emergency Fund

Life isn’t always predictable. It seems when your finances are at their worst, something comes along that requires money to fix it. People who are smart with their money have an emergency fund. With money in reserve, a home or auto repair is a non-event. You don’t need to borrow money previously set aside for bills. Try to set aside enough cash to pay between three and six months’ worth of expenses.

Retirement Fund

As early as your twenties you should start investing in your retirement. Your quality of life will remain the same with a sizable savings. Don’t count on Social Security as you’ll live with regrets. 

Social Security is only supposed to supplement your retirement. Take steps today to ensure that you have money to live well in your golden years. Most companies offer entrance into a 401(k) and many match your contribution up to a certain percentage. If your job doesn’t provide retirement benefits, you can open your own 401(k) or personal Roth IRA account.  

The Difference Between Wants and Needs

There are things you want and things you need. The needs always come before the wants. You need a place to live, a reliable mode of transportation and food on the table. You want a 70-inch flat-screen television or a shiny diamond necklace. That doesn’t mean that you can’t buy the wants. You simply need to save up for big-ticket items and pay for them cash. By doing this, you won’t accumulate additional debt, you learn to save money and you pay only the original cost. 

Many people go through life unable to manage their money. Unfortunately, it prevents financial wealth. Thankfully, you can learn how to become smart with your money and enjoy prosperity and a better quality of life. 

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