Money is great. It helps us buy the things we need, like a roof over our heads and food on the table. It also affords us the opportunity to buy what we want, like a good bottle of wine or a plane ticket to a tropical destination. As the saying goes, money makes the world go round. But then why is it that we work every day to make money, and yet, we’re not always the best at taking care of it?
According to Charles Schwab’s 2019 Modern Wealth Survey, 59% of adults in the U.S. admitted to living paycheck to paycheck in 2019, and only 38% have built up an emergency fund. How can we take control of our money so our funds can flourish? Here are six ways you can be the boss of your money today.
Establish a Budget
There’s no shock here. You’ve heard countless times that you need a budget. But have you actually made one? Maybe it’s that task on your to-do list you keep pushing off. Well, now is the time to do it.
Start by looking at your bank statements for the past few months. Take note of how you spend your money and opportunities for savings. It may be time-consuming, but it’s worth it. The first step in taking control of your money is knowing where it goes.
Start Saving Something
If you’re living paycheck to paycheck and think saving is impossible, here me out. Saving something, no matter how small, is better than nothing. Start with setting $10 aside from each paycheck. Then after a couple of months see if you can bump it up to $20. Any little bit you can set aside to an emergency fund will help when unexpected expenses arise because they always do.
The biggest bang for your buck when it comes to saving is a 401(k) especially if your employer offers a match. That’s essentially free money in your retirement account. Try to contribute the minimum amount to receive your employer’s match, so you’re not leaving money on the table.
Get Acquainted with Your Debt
Debt sucks. Plain and simple. But the only way you can do something about it is to face it head-on. This means getting real about how much you owe. Pull up statements for your credit cards, student loans, mortgage, medical bills, and whatever else you owe. Take inventory of your balances and interest rates, and then make a plan.
There are two basic strategies you can use to approach your debt: the debt snowball method or the debt avalanche method. In the debt snowball method, you pay the minimum balances on all your accounts and start contributing any extra funds to your lowest balance. Then once your smallest balance is paid off, you take that money and start paying off your second lowest balance until you’re debt-free. The debt avalanche method uses a similar concept, except instead of focusing on your smallest balance first, you concentrate on your balance with the highest interest rate and then the second-highest interest rate, and so on. Debt is personal, so whichever method you choose is entirely up to you.
Spend Within Your Means
This seems simple enough, but the hard part is actually doing it. Spending within your means simply means don’t spend more money than you bring in. Be smart with your money and stick to your budget. Understandably, you may need to use credit cards to pay for unexpected expenses that you can’t cover with your emergency savings, but defaulting to using your credit card shouldn’t be the norm.
Gain an Understanding of Taxes
Taxes can seem overwhelming, but unfortunately, they’re unavoidable. You don’t need to be an expert, but it’s helpful to have a basic understanding of your taxes. There are a lot of great resources online, like this set from Investopedia. If that still feels like too much, find a tax professional or accountant who can help walk you through it.
Remember, You’re in the Driver’s Seat
When you’re trying to be the boss of your money, the biggest thing to remember is that you’re in the driver’s seat. It’s your money, after all, and you need to take ownership of it. That includes how much you make, how much you spend, and how much you save. Hold yourself accountable to leveling up, so you can have a brighter and more prosperous future.