How to Manage Your Money

You hit the gym regularly and try to eat healthy foods. But are you doing what you can to be financially healthy, too? Learning how to manage your money takes a little time and effort, but it may be worth it when you breathe as easily when looking at your bank statements as you do after 30 minutes of yoga.

So what do you need to do to manage your money?

You can’t manage your money if you don’t know what you want to do with it.

1. START WITH GOALS

   You can’t figure out how to manage your money if you don’t know what you want to do with it. That means setting goals. One of the best ways to reach your important goals is to write them down. A recent survey found that people who have a written plan are more than twice as likely to reach their goals as those who don’t write it down. Then, prioritize those goals, so you know which ones to focus on first.

2. CREATE A BUDGET

   No one wants to count every dollar. But your paycheck can disappear quickly, especially when you’re spending it on things that ultimately aren’t that important to you. Using pen and paper or a spreadsheet, take stock of how much is coming in each month and how much is going out. Make sure you have enough for essential expenses like your rent, car payment and utilities. Then divvy up the rest for the things you want today and to save for those goals you just identified. A financial planner or professional can help with this.

3. GET A HANDLE ON DEBT

   If paying off debt is one of your goals, you’re not alone. According to a recent Northwestern Mutual study, nearly three quarters of Americans are struggling with debt. To get a handle on your debt, set aside part of your budget to begin making extra monthly payments on your higher interest debts. That way, you’re not spending as much on interest each month. It may also be worthwhile to contact your credit card company or lender to ask about consolidating your loans into one bill — and getting lowest possible interest rate.

4. SAVE FOR THE FUTURE

   Saving for a child’s education or funding retirement may seem light years away, but life has a way of creeping up on you. Set a savings target for each major goal, and start setting aside money monthly. If you’re contributing to your retirement plan through your employer, you should contribute at least enough to get any match your employer offers. Then, try to increase your contribution a little each year.

5. PROTECT YOURSELF (AND YOUR LOVED ONES)

   Life is uncertain, which means everyone needs a financial plan B. Just like you need a plan for how to manage your money when things are going right, you also one to take care of yourself or your family if something goes wrong. You should have an emergency fund to help pay for unexpected bills. Life and disability insurance can help protect you or your family if something should happen to you.

6. CHECK IN OFTEN

   Managing your money isn’t a set it and forget it kind of thing. Make sure you’re checking in on your progress toward your goals and asking yourself whether you still have the same goals. It can be easy to get caught up in day-to-day budgeting and to forget to look at the big picture. With frequent check-ins, you can ensure that you’re always making progress toward the things that matter to you most.