money moves

Smart Money Moves You Should Start Today

More than two-thirds of Americans would struggle to come up with $1,000 to cover an emergency expense.

Yet, emergencies are common. Cars break down. Medical emergencies occur. People get fired.

If you wouldn’t be able to cover your costs if one of these things happened to you, it’s time for a change.

With a few smart money moves, you can start reducing unnecessary spending, pay down your debts, and begin building a savings account. That way if an emergency does strike, you’ll be prepared.

Keep reading to learn a few money moves that could improve your life today and in the future.

Define Your Financial Goals

No matter your age or the amount of money you have in your savings account, having clear goals for your financial future is a must.

These goals will have a large effect on the rest of your smart money moves.

They will allow you to better determine a budget for your everyday spending. They will allow you to make sure you’re saving enough for your future. They may also help to motivate you to make other financially smart decisions, like getting insured or working to pay down your debts.

What your financial goals include is entirely up to you.

They could be more short-term goals, like being able to afford a vacation next summer or buying a new car. They could be goals for the next five to ten years of your life, such as purchasing a home.

Other financial goals are more long-term, like being able to retire at a certain age or having a certain amount of money to leave to your children.

Whatever your goals are, you need to define them, record them, and then consider them as you start making the other money decisions on this list.

Set a Budget and Stick to it

The next step to getting your finances in order is to set a budget.

If you’ve never lived and spent on a budget, starting one can seem intimidating. But budgeting is actually pretty simple, though sticking to it may be more difficult.

Start with your income. You can either break this down by a weekly or monthly total.

Then, list your bills. This should include the bills you have to pay, like those for rent, insurance, or a car payment.

Next, estimate your expenses that aren’t covered by those bills. This includes the amount you spend on groceries, gas, or utilities.

Finally, list your unnecessary expenses. This might be expenses like your Netflix subscription, entertainment spending like movie tickets or shows, how much you estimate you spend at restaurants, etc.

Be honest about how much you spend on these things. It won’t help you stick to your budget if it isn’t accurate.

If you can subtract your bills, expenses and unnecessary expenses from your income and still have plenty of money left over, the next step is to decide what to do with the remainder. You might allot part of the money to a savings account, investments, or to other areas.

If there’s not any money left over after these expenses are subtracted, it’s time to look at your unnecessary expenses to find ways to reduce them. Set a budget for how much you can spend on these areas. Then, figure out how best to save the remaining money.

Once you’ve set your budget, stick to it. If you find yourself struggling to do so, a spending tracker might be a big help.

Do Your Research Before Making Big Purchases

Developing better spending habits is another important step towards being smart with money.

One way to do this is to make an effort to put an end to impulse purchases. Before you make a big purchase, give yourself time to figure out whether you really need it.

What you consider to be a large purchase is up to you. If money is tight, a big purchase could be one that’s over $20. If you have some money saved or plenty of money coming in, a big purchase could be several hundred dollars.

The price of the item doesn’t really matter. What matters is that you take the time to figure out whether that’s a necessary purchase or just a vanity item for you. If it’s the latter, consider whether your money might be better off in your savings account, spent paying down a debt, or invested.

Work to Pay Down Debts

If you’ve neglected to make smart money moves in the past, or you’ve been the victim of hard times, you likely have debt hanging over you.

Debt can have devastating effects on your finances.

First, it’s money spent each month that could be going towards your expenses or into a savings account.

Additionally, your debt could be lowering your credit score month after month. This will make it harder for you to get a loan or get approved for a mortgage, which can put a hold on your financial goals.

Part of your budget should include a plan to pay off your debts, even if you have to do so little by little.

Put some smart personal finance rules to use by tackling your debts with the highest interest rates first. If all of your interest rates are high, you can look for credit cards with low-interest rates on balance transfers. This will mean less money spent on interest and more going towards paying off your debts.

Making Smart Money Moves

Now that you know a few tips for getting your finances in order, it’s time to start making smarter money moves in your own life.

Consider your financial goals. Set a budget and make every effort to stick to it. Pay off your debts, even if you can only do so a little at a time.

If you’ve put these tips to use and still find yourself struggling to manage your finances, pay off your debts, and save for the future, check out this article next. We’re bringing you 13 personal finance tips that anyone can implement in their own lives.