There are tons of reasons to protect your finances, but life often gets in the way. It can feel like money comes in on one hand and goes out on the other. So, how can you make it work better for you? From creating a personal financial budget to using goals, here are some suggestions.
Use Your Money Wisely
The money you have coming in must be used wisely. Frivolous spending on things you don’t need is the slippery slope to financial misery. Of course, you can use your spare money for what you like. But there are priorities that come first. Food, rent, and auto insurance are great examples. These are the things that must be paid in order to enjoy a reasonable quality of life. Other priorities include clothing, utilities such as gas and electricity, and anything the kids need.
Protect Your Finances with a Budget
A survey by Intuit found that 60% of people aren’t aware of how much they spend each month. Budgeting isn’t the most exciting of tasks, but it can help you get control of your money. Something as simple as a notepad or spreadsheet makes it easier to track your transactions.
Follow the 50/30/20 rule
This is a powerful method of dividing up your income. Allocate 50% of your income to essentials like paying rent and buying food, 30% for wants, and 20% to savings or debt repayment.
Use budgeting apps
Budgeting can be tricky, but it is a skill. However, there are a few apps you can use that make it easier. Mint, YNAB, and even Quickbooks help keep track of income and expenditure.
Keep tabs on rising costs
You can be caught out if you don’t be proactive with expenses. The costs of everything are always going up, with more to come. Keep track of utilities, food costs, and streaming services.
Avoid and Get Out of Debt
Okay, so pretty much everyone has debt. But did you know there is good debt and bad debt? Good debt is a debt you can afford to pay, is helpful, and doesn’t negatively impact your quality of life. For example, obtaining financing for a reasonably priced car. Bad debt is debt that you took on because of a bad deal, ignorance, or impulse, such as getting a cash loan for something expensive that you don’t need. Repaying debt ASAP helps you regain control much quicker.
Build an Emergency Fund
It’s always a good idea to have some spare money you can tap into when needed. For instance, a reserve of $1,000 is a great fallback when the car dies, or the fridge stops working. However, an emergency fund is a larger pot for more pressing situations. You never know when a job loss will happen or your home could be hit by a storm. These are situations that potentially require a large reserve of money. It is recommended that an emergency cover six months of expenses.
Protect Your Finances Online
Online fraud and data theft are among the biggest concerns when it comes to financial losses. In many cases, people make it easy for hackers and fraudsters to obtain the data they need to commit cybercrime. Yet with some simple habits, you can potentially avoid online problems.
Use strong passwords
Passwords are a fundamental part of online security. However, most people use predictable ones. A password manager such as LastPass can create and store very complex passwords.
Buy with credit cards
Most people use cards to purchase items these days. While debit cards are useful, credit cards come with built-in protection for getting your money back when there is a purchase problem.
Never use public Wi-Fi
There are a few things that hackers love when it comes to finances. Using public Wi-Fi is one of them. Don’t make it easy for them by avoiding public Wi-Fi, and use a VPN if you have to.
Invest Only What You Can Afford
Not everyone can afford to invest. However, contrary to popular belief, you don’t have to invest large sums of money. You can begin an investment portfolio with as little as $10. For example, you can invest a few dollars each month into cryptocurrency. Of course, this is risky. But every investment carries risk. However, your portfolio will grow exponentially with regular investment and pension contributions and can total a very large amount over a long period of time.
Shred Your Financial Documents
Cybercrime is one of the easiest ways for criminals to get hold of your sensitive financial data. However, there are some who still go old school! Dumpster divers can invade your trash and look for documents with data they can use. And this doesn’t necessarily have to be bank documents. With enough paper, a criminal can build a solid picture of your identity, which they can then steal. So, always use a cross-shredder to destroy ALL paper documents.
Use Goals to Protect Your Finances
A UK survey found that 6.3 million Brits struggle to pay for essential costs. And it is getting harder for more and more people in nations like the UK and the USA to enjoy a reasonable quality of life. However, goals contribute to a system for regaining control over your finances:
- Set clear goals for what you need, such as an emergency fund or retirement money.
- Work out a timeframe for achieving your goals, such as an amount in six months.
- Use automated financial services to assist with achieving your financial goals.
Seek Professional Advice
Taking care of your money isn’t easy, but it is a skill that you learn over time. With some small steps such as those mentioned above, you can help yourself get more control of expenses, save a little more, and perhaps enjoy some of your hard-earned money. However, even something like taxes can be complicated for some people. Fortunately, there are financial experts either online or in your local area who can advise you with anything you need.
Summary
Using money wisely, such as prioritizing expenditure, is one of the ideal ways to protect your finances. It also helps people stay aware of cyber crime and how to prevent data theft. If you are ever unsure about finances, speak to a local or online advisor for professional services.
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