Disclaimer: This article is for educational purposes only. The author’s views and opinions should not be taken as financial advice.
Better financial management means better management of your time and your life. To become more financially aware means you are on the road towards financial independence. Is making the most out of your money part of your 2022 goals? If so, then you have come to the right place. Just like other financial management topics we’ve previously discussed on the Empire27 forum, we’re here yet again to bring you another tip with this next article titled: 7 ways to make the most out of your money. Stay tuned and learn how you can better manage your money this 2022!
In a nutshell, the 7 Ways to Make the Most out of Your Money are as follows:
- Start Saving
- Create an Emergency Fund
- Operate within a Budget
- Increase your Income
- Consolidate your accounts
- Stay away from Debt
- Make money work for you
Start Saving
To make the most out of your money, it is often wise to save it. Opening a personal savings account is paramount for you to grow your wealth, and store it safely. It is also essential to follow the guideline of the 50-30-20 rule of money. That is, 50% of your income should go to necessary expenditures like rent, electricity, water, food, and other taxes, 30% goes to things you want to buy like a new phone or clothes, and the remaining 20% should go to savings. You may also opt to switch out the latter with 20% to expenses, and 30% to savings if you want to build up wealth much faster! Now that you are ready to save, it’s time to move on to the next step, which is operating within a budget.
Operate within a Budget
When you have a lot of money saved up, oftentimes it’s tempting to want to spend it. But we’re here to remind you to eagerly manage your spending. The general rule is to never spend more than you earn so that you don’t have a negative cash flow. What you can do to start is by writing down your goals like how much you want to have in 5 years. The next step is to list down all your monthly expenses to find unnecessary spending like old and outdated subscriptions that you have been unknowingly spending for each month. You can also opt-out to not get that Caramel Latte so often.
Create an emergency fund
Have you ever heard of that saying, ‘Save it for a rainy day? Well, that’s exactly what it means. There are no certainties in life so therefore it’s best to be prepared for every moment. And now that you’ve cut down your budget, saved enough money, it’s time to dedicate a portion of what you earned towards an emergency fund. We also would recommend that you use an account that is not so easily accessible like a debit card so you don’t end up using it to spend for shopping or other things. If your savings account has started stacking up, it’s time to put some of that cash somewhere secure enough and start building an emergency fund.
Increase your Income Potential
If you have free time, and an extra set of skills lying about, you can make some extra money from doing what you already know. Increasing your income stream can open a lot of doors. Having multiple income streams will greatly benefit you in the long run because you will build more savings, and you will always have a fallback in case something happens with your main job. You can start by applying some of your other skills to earn more money on the side, or perhaps even go as far as making it your primary source of income. An example of a popular gig these days is handling social media accounts. A lot of small businesses need someone to do their social media posts and they will pay you good money to do so. You can also try remote work by doing simple tasks on the internet like transcribing the text, solving captchas, or writing reviews. These days there are no limits on how one can earn extra income on the internet. The trick is to find a skill that you are good at and monetize it. If you are interested in working on the side as a freelancer, you can try freelancing websites like Upwork or Fiverr
Consolidate your accounts
Merge your accounts to avoid spending more on fees and taxes. Choose a savings account with the highest interest. Many banks offer more bonuses to accounts with a higher balance so instead of spreading yourself thin and spending more on taxes while receiving little rewards, it is better to consolidate or combine your accumulated wealth. Merging accounts will also help you to easily manage them and thus save time and money in the long run.
Stay away from debt
One of the easiest money pitfalls and mistakes anyone can make is falling into financial debt. To avoid this, it’s best to start by creating a habit of not using a credit card, or debt to pay for your bills or expenses. It is also recommended that you pay off your debt before you start thinking about investing in something. The general rule is to only take up a loan or credit when you are sure that you can pay it back or else you will get trapped in debt. It is like an infinite loop that some take a whole lifetime to get out of. To avoid these financial traps, the best thing to do is to pay off your debts at the soonest time possible. Debt operates with interest over time. So paying out the highest interest debts should be the immediate priority.
Make your money work for you
The last step towards better financial management is the secret of how millionaires are made. The simple trick is if you have enough money lying around, it’s time to make that money work for you! Investing is the most popular way to build wealth and income streams. And now that you’ve paid off your debt, put a hefty savings account, you may want to venture into investing. You can invest in stocks, trade commodities, buy real estate properties, or simply start that business you’ve always wanted to.
Conclusion
Life is short and the best way you can truly make the most out of your money is to spend it with the people and things you cherish the most. Be it your family, friends, or significant other. But don’t be afraid to venture into new things as well. All it takes is for you to remember these steps and you’ll be on the fast road to better financial management.
