It keeps a roof over your head, food on your table, and clothes on your back. It is money, and it may also cause you great stress at times. Considering daily life depends on money, it is important that you have a healthy connection with those powerful paper bills. The following tips may prove helpful in building a stronger bond between you and your finances and in reducing stress associated with such.
Document the Path of Your Money
If you often feel like you don’t have as much money as you should, you are not alone. While this is a common concern worldwide, the first step to creating a healthy connection with money is simple: keep track of your money. Whether you do so with pen and paper or on a spreadsheet, be mindful of how much money enters and leaves your account each month. Keep your receipts and document every dollar, from a small coffee purchase on your way to work to a splurge at the mall.
Also become familiar with your spending habits and tendencies as a consumer by comparing the sources of expenditures in your life. It is possible that the majority of your money is distributed among rent, grocery, utility bills, and car payments. Nevertheless, there may be monthly expenses that you can cut out, such as a car payment, lattes, concerts, and unnecessary shopping sprees. We all want to reward ourselves and enjoy life’s luxuries, but paying for those extras should be moderated so as not to sacrifice necessities.
By developing a visual path of your money, you are providing yourself a clear understanding of how much you make and how much you spend, which will only set you on a better course in the long run.
Formulate and Follow a Financial Agenda
Once you know exactly where your money is going, creating a personal budget is a painless task to tackle. It is a good idea to use a spreadsheet program such as Excel or one of these apps to add up all of the expenses you have been tracking. You should calculate how much you would like to budget for each category (i.e. housing, utilities, insurance, food, gasoline, clothing, entertainment, etc.), keeping in mind that budgeting for unforeseen expenses like gifts and automobile repairs may be necessary but will not occur every month.
Your budget should also include some personal savings amounts for vacation, retirement, emergencies, and any other savings goals you may have. Rather than waiting until the end of the month to see what is left over, practice budgeting for your savings first.
Following your budget is perhaps the most important, but can be a bit more difficult. Continue to track your money and see if you are actually keeping to your budget. You may notice areas where you have to make some changes, but consider alternatives before simply increasing your budget.
Make Sure Your Goals are SMART
Your financial goals should be Specific, Measurable, Achievable, Results-focused, and Time-bound, or SMART. Let’s say one of your goals is to cut spending by $500 each month, or to save $1000. Go further in depth to determine how you will cut $500 from your spending, why you are saving $1,000, and the time frame in which you want to meet those goals.
Try applying the SMART goal-setting technique to things like saving for a vacation. Determine the cost of your vacation, and use that as your specific and measurable goal. Assign a reasonable amount of time to achieve that goal (time-bound), and then come up with ways to save money (results-focused).
Seek Expert Help
If the idea of adding up all of your expenses and budgeting for various categories of your life is daunting, consider consulting a financial planner. Working alongside a professional provides you with truthful assessments and impartial explanations that will help you build a reasonable budget to live by and goals to reach for in the future, whether they be saving for retirement, establishing a college fund for your child, or investing in your own business.
By designing customized financial plans and managing wealth for a diverse range of clients, Manhattan Ridge Advisors always put clients first. No matter what stage of life you may be in, we help you create and implement a plan that enables you to invest on your terms, work diligently to minimize your liabilities, and attempt to transfer wealth safely to your heirs or charitable entities. A long-term view of your financial success is our priority, and excellent service is our promise.
Building a better relationship with money can significantly reduce the stress it may put on your lifestyle. Following these tips will allow you to approach your finances with a positive outlook and help you effectively achieve your financial goals. Contact Manhattan Ridge Advisors today to befriend your finances today.