Learning to manage your money responsibly is perhaps one of the most important lessons you can learn, and it will stand you in good stead for life. Unfortunately, it’s not something that everyone has the good fortune of learning, or it’s only something that happens later in life when money is already an issue. Don’t let this be you! In this beginners guide to managing your money, we’ll give you the fundamentals you need to set yourself up for financial wellness.
Top Tip 1: Set up a Budget.
A monthly budget will help you determine exactly what you’re spending your money on, and where you can cut costs. It will also determine how much you’ve got to spend each month, once you’ve paid your essential expenses such as your rent or bond, groceries, transport, school fees, and phone bills. There are other benefits too when it comes to setting (and sticking to!) a budget. For example, you’re less likely to end up in debt, less likely to struggle to find the money for an unexpected cost, more likely to have a good credit history, and more likely to be accepted for a loan.
Top Tip 2: Pay off High-Interest Accounts First
If you’ve already gotten yourself into debt, and you’re not sure what to pay off first, start with the debt that carries the highest interest rate. This will almost certainly be a credit card, personal loan or store account. Once you’ve paid these off or are on your way to getting them paid off, you can start thinking about putting money away each month in a savings account.
Remember, there’s nothing wrong with taking out credit unless you’re using it to fund your lifestyle each month. In fact, taking out credit and managing it effectively each month goes a long way towards building a healthy credit history.