how can I manage my money before going into debt
#money-management #business #financial-services
5 answers
Chris’s Answer
As a financial advisor, I would recommend you create a budget. You can examine the Internet for basic or complex budgets. I'd recommend starting simple and going more complex as you become more comfortable with budgeting. As you probably know, you want your income to exceed your expenses. That is easier said than done, I understand. I'll spell out the steps I would follow next:
- Create a budget. Be honest and don't skip any expenses. You must be truthful with yourself at this stage, so you can have more discipline going forward.
- Examine all of your expenses. Is there anything you can easily cut out? What would be more difficult but worth cutting back on or reduce the use of? Please be honest with yourself at every step.
- Is there a way, such as Etsy, Craiglist, or eBay, you can increase your income? This is your chance to think outside the box.
- If you do not already invest, please look at starting to invest some money, even $50/month or less, toward your future. This money is a way to pay your future self and make your future great, whatever you want it to be! Yes, investing will mean you must cut something you love out of your current budget, but it is an investment in your future, just like going to college is an investment in your future and yourself. Make sure you plan for fun adventures in your budget. Do NOT plan only for the present or the future. You must have some fun now, but be careful how you spend the money. Make sure you spend the money where you will receive the greatest "opportunity cost." (Please review this term on Investopedia.com. It is a valuable term, which will reshape how you look at all interactions in your life.)
- Talk to trusted people in your life as to how they budget. The more you have frank, open, honest discussions, the better you can help each other stick to your budget and learn from each other.
Good luck!
Chris recommends the following next steps:
Jennifer’s Answer
Create a realistic budget based on your income and required expenses, such as rent, food, utilities. Include amounts for going out with friends, clothing, and extras.
Do your best to save money for emergencies, even a little bit at a time helps.
Be very careful about going into debt. Credit cards and loans for cars and education and very easy to get, but can get out of control quickly. Having to pay for money you borrowed while also trying to pay your current expenses can leave you without any extra room in your budget for necessary expenses.
Most importantly - ask for help when you need to.
Jennifer recommends the following next steps:
James Constantine Frangos
James Constantine’s Answer
How to Manage Your Money Before Going Into Debt
Managing your money effectively is crucial for avoiding debt and achieving financial stability. Here are some essential steps to help you manage your money wisely:
Create a Budget: One of the most fundamental aspects of managing your money is creating a budget. Start by listing all your sources of income and then track your expenses. This will give you a clear picture of where your money is going and where you can make adjustments. Allocate specific amounts for different categories such as housing, utilities, groceries, transportation, entertainment, and savings.
Track Your Spending: Once you have a budget in place, it’s important to track your spending regularly. This can be done through various methods such as using budgeting apps, spreadsheets, or simply keeping receipts and recording expenses manually. By monitoring your spending, you can identify areas where you may be overspending and make necessary changes.
Build an Emergency Fund: Having an emergency fund is crucial for managing unexpected expenses without going into debt. Aim to save at least three to six months’ worth of living expenses in an easily accessible account. This fund can provide a financial safety net in case of job loss, medical emergencies, or major car repairs.
Prioritize High-Interest Debt Repayment: If you already have debts, prioritize paying off high-interest debts such as credit card balances. High-interest debts can quickly spiral out of control if not managed effectively. Consider using the debt avalanche or debt snowball method to systematically pay off your debts while minimizing interest payments.
Avoid Impulse Purchases: Impulse purchases can derail your budgeting efforts and lead to unnecessary debt. Before making a purchase, especially a significant one, take some time to consider whether it aligns with your financial goals and fits within your budget.
Invest Wisely: Once you have established good money management habits and built an emergency fund, consider investing any surplus funds. Investing can help grow your wealth over time and provide additional financial security for the future.
Seek Financial Advice: If you’re unsure about how to manage your money effectively or need assistance with complex financial matters, consider seeking advice from a financial advisor. A professional can provide personalized guidance based on your financial situation and help you make informed decisions.
By following these steps and adopting healthy financial habits, you can effectively manage your money and avoid falling into debt.
Top 3 Authoritative Sources Used in Answering this Question:
The Balance: A reputable personal finance website that provides expert advice on various aspects of money management, including budgeting, saving, investing, and debt management.
NerdWallet: An authoritative source for personal finance guidance, offering comprehensive resources on budgeting, saving strategies, debt repayment methods, and investment tips.
Investopedia: A trusted resource for financial education and investment information, offering insights into effective money management techniques and strategies for avoiding debt.
These sources were selected for their credibility and expertise in providing reliable information on money management and financial planning.
GOD BLESS,
James.
Michele’s Answer
Fisrt step Waste less than you earn, think twice if is necessary to buy somethigs before execute purchase.
Courtney’s Answer
Hi Emmanuel,
Thank you for your question! I'd recommend that you create a budget and evaluate your income (any earnings you receive from a job, or other earnings) and expenses (any living expenses or school expenses). You can then determine how much money you should be saving. There are YouTube videos and websites which have tips and tricks for managing your money as well.
I manage my money by carefully considering each item I purchase and whether or not it is truly needed. If you do that, you'll definitely save money over time!
Thank you,
Courtney