Regardless of how much money you make, it can be challenging to come up with a wise financial plan that works for you and your family. When you do not have a plan and a budget, it is easy to accrue debt without even realizing it. Getting on the path to financial freedom is not always easy, but it is always worthwhile. Use these tips to gain control of your finances.
Track Your Spending
Many people get into financial trouble because they do not really understand where their money is going. If you are ready for financial freedom, the first step is tracking your spending for one month.
Keep all of your receipts, and enter the information into a spreadsheet. Don’t forget to include every expense, even the cup of coffee that you purchase on the way to work or the lunch money that you give your son.
Develop a Budget
Once you have tracked your spending, you can see where your money is going. Most likely, you will find some areas where your spending needs to be reduced.
Accountability is a big part of proper money management, and creating a budget provides this accountability and tells you where your hard-earned dollars should be going. Keep in mind that your budget will likely need to be modified as you work through the first few months.
Include Some Fun Money
A strict budget helps you manage your money, but it can feel too restrictive to many people. Eliminate the temptation to waste money on big splurges by building some fun money into your budget. This is money that you can spend every month in any way you like. You might want to spend your fun money on baseball tickets, while your wife uses hers to purchase lunch out every week with her co-workers.
Have Regular Financial Check Ups
Changing your spending and saving habits is not easy, so it is important to track your progress. Having regular financial check up meetings with your partner is a great way to celebrate your accomplishments and determine which areas still need work.
When you are first starting, have a financial check up every month. As you improve your money management habits, bi-yearly meetings should be sufficient. The people at Air Force Federal Credit Union can help you with these financial checkups, and provide great professional advice for your finances.
These tips are the basis of smart money management. You will likely have some hiccups on the road to financial freedom, but you will find success if you stick with it and don’t give up.