You may be thinking, “Why does it seem so hard to be financially stable?” Today, you are keeping up with your savings. Tomorrow, you’re binge-spending them again. According to a recent study, 40% of Americans can’t set aside $400 for an emergency. Which means you’re not alone. But how do you manage your finances?
Mastering the skill of personal financial management is vital. It doesn’t only make you financially responsible. It also prevents you from future economic crises. You can consider tracking your expenses. But, this is only one of the many ways. This article explains seven surefire ways to help you attain financial stability.
- Set financial goals
A few people find goal setting tiring. But the first step to achieving financial stability is setting financial goals. Research shows that 76% of people who wrote down their goals succeeded in achieving them. Setting S.M.A.R.T—Specific, Measurable, Achievable, Reliable, and Timely—goals motivate you to achieve financial stability. Break your long term financial goals into milestones to help you attain them.
- Have a budget
Nothing feels better than getting an increase in your income. Most times, we think that the more we earn, the more we should spend. The thoughts of a sleek new car and flashing looks of designer wear fill your mind. As none of these thoughts is terrible, you still need a budget. After receiving your weekly/monthly income, it would be best to account for your expenses. You can start by setting a percentage of your income for all your expenses. These expenses may include gas, groceries, fashion wears, etc. You can make a list of the essentials you need in order of priority. We recommend you use the 50/30/20 budgeting rule. The rule emphasizes prioritizing your income into three: Essentials, wants, and savings.
- Track your expenses
Tracking your daily expenses can be wearying. But it is an effective method of making the most of your finances and also achieving financial stability. Tracking your expenses shows how you spend your income. Writing your expenses on paper can be a bit overwhelming because you might forget to do so. You can consider using money tracking apps like Mint, PocketGuard, etc. Or you can use special features on google spreadsheets or Microsoft Excel.
- Embrace savings
When setting your weekly or monthly budget, you should consider putting a percentage aside as savings. Your savings can be towards retirement, getting a new car, or a tuition fee. Most times, saving money can cause you to cut out your favorite expenses, like eating at a new restaurant. But no doubt, the results are overwhelming. You can also consider using mobile savings apps like Mint, Digit, Chime, etc. With these apps, you can set an estimate of your savings, deducted at your set time.
- Have advisers
Concerning achieving financial stability, there’s no limit to what you can know. Gather relevant knowledge from blogs, podcasts, etc. Or you can consider having a personal accountant. There are also online courses that teach financial literacy. You can consider enrolling in one or two of these courses. The process might seem tiring, but the results are fantastic.
- Set up emergency funds
No one hopes for disasters. But there’s no denying that they do happen. It is only wise that you set up another account for your emergency funds. Emergency funds protect you from unexpected expenses such as unforeseen medical care or home appliance repairs. You can consider setting a separate account for your emergency funds.
Maintaining financial stability is vital to establishing financial freedom. The results don’t come immediately. But with persistence and determination, you can make the most of your finances.