If you want control over your finances and to build a stable future, the only person that can truly get you there is yourself.
Sure, others can give advice, but you’re the one that has to put it into action. And, not many of us can afford a personal financial advisor, at least not in the beginning, so the responsibility is on you!
Let’s take a closer look at how you can become your own financial guide …
1) Learn the Basics
The internet has a wealth of free information and everything you need to know to learn the basics of personal finance and investing. Of course, not everything you find will be helpful, but if you stick to trusted sources instead of those trying to sell you something, it won’t take long gain that foundational knowledge.
As long as you’re monitoring your finances, setting some aside as savings, and looking to invest at some point in the future, you’re on the right track.
The absolute first step to getting a handle on your finances is to budget. You can’t chart your own path if you don’t even know how much you have coming in and what you spend your income on each month.
All you need to do is open a spreadsheet and calculate the difference between the two, noting down every single expense (rent, groceries, utility bills, phone and internet, travel costs etc).
It’s also a good idea to monitor your spending for a few weeks because we all buy food and other items that we’re not always consciously aware of.
Now it’s all mapped out you can see where you might need to cut spending and how much you can realistically divert to savings accounts and investments.
Tip: There are now many handy apps that can keep track of your spending and even link up with your bank accounts and credit cards, to give you an accurate picture of your finances.
3) Set Goals
Having a vague notion that you want to be rich one day will not get you rich. To be successful you must regularly set goals, from savings goals to your career path.
A more realistic long-term goal would be to ‘earn $60,000 a year by 30.’
You can then start putting that into action. Which careers average that as a salary? What qualifications or experience do you need to get there?
Start breaking your long-term goal into shorter-term goals and ride the wave of momentum!
4) Embrace Credit
Many people have in their mind that they’ll never use a credit card or take out a loan, but it’s very difficult to avoid car finance, a mortgage, and other forms of credit in modern life. And, even if you’re not taking out credit, companies will perform credit checks, including landlords, cell phone providers, and even some employers. If you have no credit history your credit score won’t be good.
Therefore, it’s wise to embrace credit early-on and learn how cards and loans work. Taking out a $5,000 loan isn’t going to destroy you if you can afford it, but successfully repaying it on time will reflect positively on your credit report.
5) Regularly Read Financial Websites and Magazines
Do you like sports? If so, how much time do you spend watching games on TV, reading about your favorite teams and players online, and discussing things with friends?
Most of us don’t give two thoughts about all of the time we spend engaged with our hobbies, but how much time do you spend considering your finances?
Granted, not everyone is enamored by money, but just as it takes time to learn and engage with sports, it also takes time to learn and engage with finance.
Take the time to bookmark and read some popular personal finance blogs and websites or subscribe to traditional magazines like Money, Kiplinger, or The Economist. Over time, basic information will become ingrained.
Managing your finances is an ongoing process. Never become too comfortable or assume your original plan of action will see you through. Everyone has changes in career, the economy is always fluctuating, and your goals and circumstances may change.
Regularly assess your overall financial picture and tweak things accordingly.
Not everyone can be Bill Gates or Warren Buffet, but by taking on board the above tips and taking the time to focus on your finances, you will soon be making wiser financial decisions and building a wealthier future. Got any advice to share about how you have already taken control of your finances? Let us know in the comments below!