Learning and creating sustainable financial habits is not easy, even if you’re a full-grown adult. There are a lot of things you’ll have to consider and more will come as time goes by, making financial management a stressful endeavor that could leave anyone feeling tense and overburdened.
After all, a beginner’s guide to budgeting was not part of school curriculums before, and properly handling money was something that many people had to learn by themselves when they grew up.
It’s a good thing that some schools are now offering financial literacy programs to teach students how they can manage their finances. But what about working adults like yourself? That’s what this article is for: to help you make the most out of your money and kickstart your journey towards financial stability.
By everything, it means your current financial situation, goals, frustrations, and steps you’ve taken towards your journey to financial freedom. Writing or even journaling your finances will help you lay down every aspect of your money management and get a clear view of the things you need to work on and even come up with new ideas on how to finish or address them.
Seeing the bigger picture of your financial situation gives you a visual of the possible outcomes of every decision, thereby allowing you to make smarter choices moving forward. Writing can also help you understand and release your frustrations regarding your finances, eventually freeing yourself of negative feelings and thoughts that could otherwise affect your decision-making process.
Being financially literate goes a long way in helping you become self-sufficient and financially stable. To achieve that, you would have to do some serious studying and research on different aspects of finance such as wages, loans, taxes, credits, debts, and even interest rates. It will take a lot of work and patience to get a better grasp of these facets, so it’s best to take your time in learning them.
There are a lot of books, videos, online classes, and other resources you can use to hone your financial knowledge. If possible, you can also seek the guidance of a qualified financial advisor to help you in making a realistic money management plan and meet your financial goals.
The most important part of managing your finances is tracking and allotting a budget for all of your expenses. As an adult, you’ll be responsible for paying and buying your everyday needs; from water and electricity bills to groceries and rent or mortgages. You probably have to pay for various loans and credit dues as well.
Handling these costs can be overwhelming. That’s why it’s important to organize your expenses and know where your hard-earned money goes. One way you can organize your finances is by creating a list of all your expenditures on a spreadsheet.
Prioritize necessary payments like utilities, housing, debts, and loans over spontaneous or impulsive purchases. Doing so gives you a comprehensive view of your finances, allows you to cover important dues, and maintains (or improves) your credit score.
You can also use budgeting apps where you can conveniently list down all your expenses and set due dates for each of them. Using a budgeting app will also save you hours on number crunching since these tools make the calculations for you and even spare you from late payments.
Now is the best time to start saving up for a rainy day and your retirement. Having an emergency fund will prevent you from going into debt and give you peace of mind if you ever have to cover unexpected expenses or live a few months without a job.
On the other hand, starting a retirement fund early gives it more time to grow thanks to a financial process known as compounding. Sometimes called compound interest, compounding is the process of earning interest on top of the interest that has already been accrued from prior periods. Simply put, it is a means to possibly increase the size of your savings over time just by maintaining your investment in the market.
When you have both an emergency and retirement fund in place, you are guaranteed a safety net when a crisis hits and when you finally stop working.
Financial literacy can be a difficult concept to learn, but you don’t have to finish a degree to understand it. What’s important is that you have the will to study it and the discipline to follow through with the plans you made.
You also don’t have to do everything immediately. Take as much time as you need and don’t pressure yourself to achieve all your goals at once. Small achievements will eventually turn into bigger wins over time as long as there is consistency in your actions.
But remember, being financially responsible doesn’t mean you have to be uptight with your expenses. Indulging yourself now and then with things that spark joy can give you the boost of confidence, energy, and self-control you need to continue carrying out your plans for the future.
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