Managing money, as stressful as it is, is a necessary part of your adult life. Unfortunately, education on this matter is wildly inconsistent and not readily available to those who may need it. If you were never taught how to manage your finances, here are some things you should know.
1. Use Credit Cards to Your Advantage
Credit cards have earned a bad reputation and those who lack financial literacy may not understand their downsides. But it’s important to know that, if used methodically and responsibly, they also provide a chance for positive growth.
Any credit card can be a great asset, as long as you formulate a plan before using it. However, a credit builder card is especially beneficial if you’re trying to improve your credit. This type of card relies on a deposit you make initially to fund your line of credit. This deposit removes some of the risks for lenders, making it easier to get approved for credit. Other than this initial deposit, both types of credit cards work the same and should be used responsibly.
When using credit cards, it’s recommended to keep your balances below 30% of your total allowed credit. Or better yet, pay them off fully each month. In addition, use a debit card for the rest of your purchases to ensure you keep your credit utilization low. By doing this, your credit score will gradually rise, you won’t overspend, and you’ll have more control of your money. If you manage them responsibly, instead of putting you in debt, credit cards can help build your financial reputation.
2. Follow a Budget to Gain Financial Awareness
Budgeting sounds boring, uncomfortable, and time-consuming — because for many people it is! But it doesn’t have to be; creating even the most basic spreadsheet provides a useful overview of your situation. Start by taking notes to see how you are spending your money. This will let you know what changes you may need to make to improve your habits.
When you see your finances from this new perspective, you can begin making adjustments to improve your financial situation. This financial awareness will lead to better saving habits, more conscious spending, and higher self-confidence. You may not even have to force yourself into any new habits or rules. Sometimes gaining a new perspective can help these changes come naturally.
3. Shop Smart to Save Money
When it comes to shopping for products for self-expression (like furniture and clothes), certain items naturally draw your attention. Maybe you saw an ad for a coat that fits your style, and you want it more than any other. The ad likely told you where to purchase it and for how much — but it’s almost guaranteed you’ll be overspending. You can, of course, buy new things you want directly from the store, but you won’t get your money’s worth.
If you’re in the market for new clothes, for example, do your best to avoid buying them at retail price. Even slightly used items from thrift stores, clearance racks, or online marketplaces are available for much less. Anything you find new at a store will go on sale eventually, and there are always people selling similar items. Going this route also gives you access to a much more eclectic pool of products for a more personalized style.
4. Upcycle to Reduce What You Need
To take the concept of frugality even further, you will find a lot of convenient solutions by “upcycling” unused objects. This is the process of reconstructing old objects you would otherwise throw out into a solution for a current need. For example, if you need a new tablecloth, perhaps you have an old curtain somewhere you can use! Another common solution is to use old mason jars for drinking glasses. These also make fun conversation pieces when guests come to visit.
Not only does upcycling save you money by reducing your purchasing needs, but it is also environmentally friendly. You may be surprised how many things you can do with items you previously considered trash. And when you upcycle, you’ll create less waste in the process, which in turn reduces the amount your household consumes. Upcycling contributes to a more frugal way of life, benefits the environment, and saves you money in the long run.
5. Use Price-Watching Tools to Score Deals
As previously discussed, buying used is a great way to find less expensive items of similar quality. But that may not be an option for some products you need or want. In this case, instead of searching in vain for lower prices right now, there are tools to help you wait retailers out. For expensive purchases that you know you’ll need eventually, price-watching tools are perfect because you can monitor them without effort.
Creating a price alert is simple and will let you know when your item goes below a certain amount. When you find something that costs far too much, instead of feeling hopeless, you can turn to your price-watching tools. Research the item’s price history, set up an alert, and let it do the rest. Then, when everything lines up perfectly and the price is right, you can grab it without hesitation. This is a great way to get those new products you want and avoid paying too much for them.
Everyone’s life experience is different depending on where and how you grew up. Some of these money management tips may feel like common knowledge, while others were previously unknown to you. Regardless of your situation, you now have the opportunity to use these tips to your advantage and improve your finances.