If you have thought about coming up with a better money management plan, now is a perfect time. The COVID pandemic has left many of our financial lives in need of a little TLC.
Keep reading for the best steps you can take to handle your finances better.
1. Talk to a financial planner
One of the best things you can for your money is to talk to a financial planner.
Three resources can help you find a planner that works for you:
- The Association for Financial Counseling & Planning Education: It has a comprehensive list of planners that work with clients of all income levels.
- The Garrett Planning Network: It has a nationwide directory where you can choose a financial planner that works with middle class clients in your state.
- Consider a robo advisor: Although a robo advisor can’t give you everyday financial advice, it can manage your retirement money for you without many of the expensive fees.
2. Build a budget
Budgeting is hard and doesn’t sound like fun, but it’s essential. You need to know how much money you’re making and spending.
Otherwise, you’ll have no idea where to even start when you try to manage your money. To build a budget, start simple and feel free to make it more detailed over time.
If you’re having a hard time, try these apps to help you budget.
3. Track your spending
A key part of budgeting is knowing where your money is going.
If you know where your cash goes, you’ll see where you can cut back.
Tracking your spending can be as simple as monitoring your bank accounts and adding the expenses into an Excel sheet or using an app service.
4. Cancel or freeze anything you don’t use
Once you figure out what you’re buying, take a closer look at those monthly expenses.
- Gym membership
More than likely, your gym membership was frozen for a while during COVID. Are you still exercising on your own, or do you really miss the weekly yoga classes? Think about whether you actually need to pay for it when your gym opens back up.
- Magazine subscriptions
If you have a pile of unread New Yorkers, it might be time to reconsider paying for it. If you’re actually reading and enjoying it, great. Otherwise, consider dumping it.
- Automatic shipments
You sign up for the auto shipment to get the 10% discount and then forget about it. Eight weeks later, you have more laundry detergent than you know what to do with. Cancel these automatic shipments if you don’t need them.
- Other subscriptions
If you’re paying for any movie or music streaming services that you don’t use often, get rid of it. The same is true for software and game subscriptions.
Start by cutting one at a time—and see if you even notice.
5. Start a retirement plan
The first step is always the hardest, and this rings true with retirement accounts. It can seem daunting to start one, but it’s actually pretty easy.
The Internal Revenue Service (IRS) has a useful breakdown on how to start an individual retirement arrangement (IRA) that can be a great starting point. According to the IRS, you can start an IRA at any of the following:
- Bank or other financial institution
- Life insurance company
- Mutual fund
After opening the account, you just have to figure out how much you’ll contribute per month. Starting small is totally fine.
6. Pay down high-interest debts first
The average person under 35 years old has a whopping $67,400 in debt. Most of this is credit card and student loan debt.
If that’s the case for you, start paying off your credit card debt first. Most likely, you’re paying more in interest to hold onto credit card debt than you are on your student loans.
To make sure, look at the interest rate on each of your debts. Pay off the highest one first.
Small changes can add up
Try not to overwhelm yourself by doing everything at once. The most important thing is to make small adjustments that you’ll stick with.
Even tiny changes in spending and saving can have a big effect over time.