9 simple ways to manage your money better
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Feel like you’re consistently overspending each month? Are you overwhelmed by financial jargon as you look at ways to cut back? Do you have enough saved up in order to survive an unexpected expense?
Managing your money can be stressful for all of us. From budget spreadsheets and credit card statements to student loans and 401(k)s, it’s no wonder that fully understanding your personal finances might sometimes seem like a daunting, uphill struggle.
A recent Varo survey conducted by Propeller Insights1 found that 85% of American adults sometimes feel stressed out about money, and 30% feel stressed out about it constantly. No one wants or deserves to live in a constant state of financial worry, which is why we want to help.
Learning how to manage money doesn’t mean you have to master spreadsheets or get a math tutor. Fortunately, there are simple ways to control your finances and help improve your financial (and mental) health.
Here are some simple and realistic strategies to get started with on your path to financial peace of mind.
1. Start tracking
The first step to managing your money better is figuring out where your money is going. Keep a running list of all your spending each month, including both necessary expenses (rent, utilities, car payments, etc.) and what you spend your leftover or discretionary income on (dining out, vacations, gifts, etc.). Start saving your receipts, use an app such as Mint or PocketGuard, or even just make a note on your phone after every purchase.
When you start accounting for each and every purchase you make, it’s easier to see how small purchases here and there add up and track areas where you might be overspending.
Set aside some time each day or week to review your transactions and see where your money is going. As a bonus, it’s also a great way to catch any errors made by a store or bank, such as incorrect transaction amounts or fees, and catch fraud or identity theft.
A Varo Bank Account can help you make progress with your money, and comes with no fees or minimum balance. It’s convenient, efficient, and easy to open and manage—all you need is a computer or mobile device and an internet connection to apply.
2. Look at what you can cut
Now that you know where your money is going, can you identify areas where you can save without drastically changing your lifestyle? Do you have any memberships, subscriptions, or accounts that you’re paying for but could probably live without?
For example, if you have a gym membership that you’ve always had but rarely use, consider canceling it. If you head to Starbucks every day, maybe it’s time to start brewing coffee at home and treating yourself to a Venti latte once a week instead. Are you finding you often make impulse purchases at the grocery store? Make a list beforehand (and stick to it) to help avoid grabbing extra items you don’t need.
Learning how to manage money doesn’t always mean cutting big chunks from your budget all at once. By slashing small expenses, especially ones that won’t greatly impact your life, you can save more of your hard-earned dollars and cents for the things that matter.
3. Add due dates on your calendar
If you’ve gotten hit with late fees more than once, make a monthly calendar showing when each bill is due, as well as any dates where you anticipate an upcoming expense. In addition to keeping track of bills, you can also set appointment reminders for when your taxes are due or when you should check your credit report again.
4. Understand your credit report
Speaking of your credit report, if you want to manage money better, it’s a good idea to review your credit report regularly. Your credit report is a snapshot of your credit activity and current credit situation, including your loan-paying history and the status of your credit accounts. You can request a free copy of your credit report from each of the 3 major credit reporting agencies—Equifax, Experian, and TransUnion—once each year at annualcreditreport.com.
Your credit score, which typically ranges from 300 to 850, helps demonstrate to lenders the likelihood of you paying your bill on time. A high credit score means you have good credit and are less of a risk. A low credit score means you have poor credit and are a much riskier customer to lend money to or enter an agreement with.
Landlords, mortgage or loan lenders, utility providers, and even employers use your credit to predict your future financial responsibility when it comes to things like loans, credit cards, rental leases and insurance premiums. That’s why it’s critical to make sure your credit report is accurate.
5. Make your savings work harder
Paying attention to interest rates is important when it comes to managing your money better. If you have credit card debt, student loans, or a car payment, figure out which has the highest interest rate and try to pay that one off first.
If you have a savings account, how much are you earning in interest? Consider growing your money faster with a high-yield Varo Savings Account, which offers a starting Annual Percentage Yield (APY) that is significantly higher (3.00%) than most banks2.
6. Keep savings and checking separate
Reduce the temptation to dip into the funds you’re saving for a house, a vacation, or a new car by keeping your savings in a separate bank account than your checking. If that money isn’t sitting in your checking account, you’ll be less likely to spend it, and it can earn more interest as an added bonus.
7. Store up for a rainy day
Things that are out of our control inevitably happen, so make sure some of the money in your savings account is set aside for emergencies. A good rule of thumb is to have enough to cover 3 to 6 months’ worth of living expenses in your emergency fund. That way, if you lose your job, suffer a debilitating illness, or need to make a major repair to your home, you’re less likely to need to go into debt to deal with it.
8. Think about your goals
It can be daunting to think about funding your emergency fund all at once—so don’t. Instead, set a monthly savings goal to get you in the habit of saving regularly.
While you’re setting an emergency fund savings goal, why not set some other specific financial goals to keep you on track? Try to make your goals as clear and reachable as possible. For example, how much debt do you want to pay off and by when? How much do you want saved and by what date? If your longer term goals include buying a house or making a large purchase, factor those into your regular savings habits.
9. Set it and forget it
Another way to get in the habit of saving regularly is to automate your savings, and there are a number of ways to do it.
First, you could set up automatic transfers from your checking to your savings account, which can help you save for important goals without having to remember each month or paycheck.
Another way to automate your savings is to round up every purchase you make to the nearest dollar and invest the difference. That’s what Varo’s Save Your Change does—every time you make a purchase or transfer money out of your bank account, it rounds up to the nearest dollar and sweeps that money into your savings account. For example, if you buy a cup of coffee for $3.50, Save Your Change will round that up and move 50 cents from your bank account to your savings account. Over the course of a year, you could save over $300.
Learning how to manage your money better is all about getting back to basics. Make sure your essential needs are covered, responsibly manage your debts and savings, and avoid overspending where you can. By doing so, you’ll be laying the groundwork for a more secure financial future.
1 2018 survey for Varo conducted by Propeller Insights of more than 1,000 U.S. adults age 18+
2 According to The Ascent’s review
Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.
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