Paying bills can be frustrating -- and downright difficult -- if your finances are not in order. If you’re struggling to make ends meet or just want to know how to make your money last each month without difficulty, keep reading. We’ve put together 5 simple tips to help you start managing your finances like a pro.
Sign up for automatic payments
Paying a bill late can have devastating impacts on your credit, not to mention your pocketbook. When you forget to pay a bill on time or don’t have enough money to cover it until after the due date, you run the risk of increasing the amount you owe by thousands of dollars.
One of the worst aspects of late payments? They’re shown on your credit report for 7 years, which means they can affect your ability to get a loan, buy a house, or do anything else that involves a major financial decision for years after you’ve already paid the bill.
One thing to keep in mind with your automatic payments is to read all your payment confirmations to make sure the bill was paid and that the price wasn’t increased or incorrect.
Pay off debt
Debt like student loans and credit cards can be a nearly debilitating drain on your finances. The faster you pay them off, the more you’ll be able to stand as a financially independent person. If your loans are making it nearly impossible for you to pay your other bills, consider refinancing. You also, in the case of federal student loans, may qualify for loan forgiveness. Be sure to research all your options before choosing which to go with. Staying apprised can help you pay off more in the long run.
Remember, student loans are not “good debt” that you should keep around. Do yourself a favor and get them paid off as soon as possible. You can do this through the refinancing and forgiveness options above, but there are also other ways to decrease your repayment time. Examples include paying more than the minimum each month, setting up automatic payments for your loans (many lenders will offer a decrease in interest rate when you sign up), and putting any extra money you come into toward your loans.
Create a budget
Have you ever checked your bank account thinking you have a certain balance left, only to discover a much lower amount that you expected? Unfortunately, that’s a common problem when you don’t create a budget and stick to it.
A budget is a great way to see where your money is going and to determine what changes you can make to save more money. There are plenty of ways to create one, but the simplest method is to create a spreadsheet or Google Doc and outline your monthly income, recurring expenses, and how much you want to spend in each category of spending.
One of the biggest reasons you should work to get your finances in check is risk. The risk of something unexpected happening that saps the finances is too great to ignore. The best way to avoid being dragged under by unforeseen payments is to save at least 10% of each paycheck. Many banks even have settings you can turn on that transfer a certain percentage of each purchase to your savings account. If you have trouble setting money aside from the moment you receive a check, that can be a good way to get started with saving. Even if saving seems difficult in the beginning just remember: you’ll thank yourself for it later.
Start with a plan
Structuring your finances is often frustrating and difficult without the necessary research. However, it can also be extremely helpful in the long run. No matter where you’re at financially, these tips should give you a good idea of how to improve your situation and budget according to your needs rather than your wants.