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A lack of intentionality when it comes to your personal finances, will affect your earnings, spending, and saving. That being the case, gaining a handle on your finances and establishing solid financial habits early on can place you in a much better financial position.
Money Coach, Speaker, and number #1 best-selling Author Dakota Grady shared with The Money Exchange a couple of pointers to help you get in control of your finances and to make progress towards your financial goals.
Pay cash when making a purchase
Cash makes it easier to budget and stick to it. When you pay with the cash you've budgeted for purchases, it's easier to track exactly how you're spending your money. It's also an eye-opener and keeps you in reality as to how much cash is going out vs. coming in from week to week or month to month.
Settling your purchases using cash also allows you to keep your debt in check because you don’t have to worry about incurring accrued interest unlike if you made a purchase on credit.
Create a rainy day fund
A rainy day fund is an amount of money set aside for small expenditures that are outside of your normal living expenses. The idea is to use a rainy day fund for one-off expenses, such as a car or home repair.
There isn’t a certain amount of money required for a rainy day fund as it is subjective for everyone however experts suggest $1,000 as a starting point. For instance, with $1,000 you can be able to cover your car repair expenses.
Your rainy day fund should ideally be equal to the maximum amount you can expect to spend for an unexpected bill. If your healthcare deductible is $1,500, you should set aside at least that amount in your emergency fund. The cost of car repairs varies, however standard repairs such as brakes or alternators cost between $400 and $700. It's a good idea to boost your savings goal in case two rainy days occur near together.
Having money set aside in your rainy-day fund also helps you avoid going into debt by covering all those small inconveniences that may tend to sprout up. While a $250 repair to your broken window may not seem like much, it can affect your budget or even put you into debt if you aren’t prepared.
You can start this with online budgeting envelopes, using Qube Money! Click here to begin!
Have a money plan
This can also be called a budget. Having a money plan will help you track your expenses, save for priorities, and repay debt.
A budget is an important aspect of achieving financial stability and keeps you from feeling financially overwhelmed that way, you never spend beyond your means, you are always well-prepared for unexpected expenses, and fewer things have the ability to jump up and bite you.
Tracking your expenses doesn’t have to be overwhelming and with the help of It$ My Money Budget Sheet, you can take a bird’s eye view of your expenses and manage your debt.
Your money can work in your favor if you are willing to adopt new habits and change your mindset. This is what Dakota Grady believes and he shared it in Episode 99 of The Money Exchange:
Write something about yourself. No need to be fancy, just an overview.