You’re not alone if you have had no positive role models on how to manage your money. That’s been the experience of millions of people who did not grow up in affluent families.
Since you didn’t have a clear idea of what it takes to make and manage money, you acquired bad money habits that have shaped your life. Still, it’s never too late to learn how to get good at making, managing, and growing your money.
Start by reducing or eliminating your debt. Then start saving some money every week by paying yourself first. Then learn how to spend less than you earn. Finally, create a financial plan.
Reduce or Eliminate Your Debt
Your naïveté about money may have resulted in you borrowing money without considering how you will earn enough to pay it back. Often credit card companies, for example, approve college students for MasterCard or Visa, knowing full well that they haven’t yet entered the working world, other than working at minimum wage part-time jobs or unpaid internships. They also know that young adults are far more likely to spend more than they earn.
You can merge similar types of debt under one debt consolidation loan. For instance, if you have credit card debts, then you might also be able to pay off other types of fiscal cards, such as gas cards and store cards.
With a personal loan from Georgetown Funding, for instance, you could theoretically consolidate all types of unsecured personal loans. To find out more, talk with a credit counselor, who can tell you what types of debt can be grouped together and paid off with a single consolidated loan.
Whether you reduce or eliminate your debt entirely depends on how much you’re in debt, and what types of debts you have incurred.
Interestingly enough, you’ll also pay less when you consolidate all your debts. This is because your total interest will be lower. In addition, you won’t have to worry about incurring penalties, such as late fees, if you can’t pay off all your creditors each month.
Get Into the Savings Habit
Yes, pay yourself before paying off your bills. Choose a percentage to save that will not compromise your ability to pay off all your bills each month. Ideally, pay yourself 10% of what you earn. If you can’t afford to pay yourself 10%, then drop to a lower percentage. Just pay yourself something, no matter how little. Gradually, as you get better at making, and managing money, you can pay yourself more.
Of course, if you can pay yourself over 10%, more power to you, just be careful not to become so frugal that you deprive yourself of the things that you need to live a happy, healthy, and balanced life.
Savings is a passive way to grow your wealth. Although you may not earn much from an interest-bearing savings account, by saving every week and every month, and during certain times of the year, say, when you get your tax refund or an employee bonus, your savings account will grow. Later, when you have saved a substantial amount, consider learning how to invest in stocks so you can grow your funds at a faster rate.
Create a Financial Plan
Just as you have goals and plans for other areas of your life, also consider setting goals and plans for your money, too. A financial plan is like a budget, except you are looking at a longer range such as five or ten years. A budget, by comparison, is only looking at the weeks, and months ahead. Of course, you can use both a financial plan and a budget to manage your money.
In closing, consider these strategies just these beginning. Although they can change your life for the better, keep in mind that they are just the start of your journey to making, managing, and growing your money. Remember to continue your quest to learn more about money. Many personal finances websites, blogs, and online courses can help you learn exactly what you should do to consistently improve your finances.