7 Tips & Tools To Track And Manage Personal Finances

personal finance tips

We’re all aiming for security and stability in every aspect of our life. As we grow older and more responsible, we start to realize how significant it is to look further into our future and think about the long term effects of our current actions. This is precisely why we have to track and manage our finances and make sure we take full control over them.

But, not everyone’s aware of how proper finance management is conducted. Luckily, we’ve got you covered. We’ve put together a list of 7 tips and tools that can help you manage your personal finance like a professional. This can help you reach your short and long-term financial goals and take full control over your money.

Let’s break it down together.

1.    Analyze Your Income

Starting from scratch, the first thing you’ve got to do is to analyze your family income. You’d be surprised to hear how many people don’t know for sure what’s the monthly income of their family.

Therefore, sit with the rest of the family members who are providers and analyze your:

  • salaries
  • bonuses
  • pensions
  • temp-job wages
  • other sources of income

Together, create a family income table and you’ll be certain you know exactly how much money you’ve got at your disposal.

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    Without an income analysis, you can’t start thinking about managing your personal finances.

    2.    Categorize Your Monthly Expenses

    The second step you have to take is to define and categorize your family’s monthly expenses. So, where does your money go?

    Once you analyze the expenses from the last couple of months, you’ll have a clear idea of where your money’s going and how to handle it better.

    Make sure that you single out the following categories:

    • Utilities & Bills
    • Taxes
    • Groceries
    • Personal Hygiene
    • Transportation
    • School & Child Care
    • Hobbies & Leisure
    • Debt

    Make sure you analyze your expenses as precisely as possible to gain a better understanding of how you’ve been handling your money so far.

    3.    Set Goals

    Now it’s time to think about the changes you’d like to introduce into the management of your personal finances. What is it that you’d want to change, accomplish, and turn around about the way you spend or save money?

    “To be able to make changes in your finances, you’ll have to think about specific goals. The goals can vary from small and simple, to more serious and complex, but they have to be specific,” says George Pearson, a financial advisor, and writer at Subjecto.

    Think about what you want to achieve:

    A goal can be anything you set your mind to and defining it is the first step towards making it happen.

    Once you define your goals, you’ll have to re-assess your current situation and make the right calls.

    4.    Create A Budget

    The first step towards reaching any of your financial goals is setting a family budget. Without it, you won’t be able to track your money and make the changes you need to make.

    Family budgeting is all about making a plan that will allow you to decrease your expenses and save money for your goals.

    That means that you need to:

    • analyze the way you’re spending money at the moment
    • find places where you can cut down the expenses
    • set a clear budget for each of the categories we’ve listed above
    • be prepared to take more precaution when spending
    • give up on the things you don’t actually need

    Naturally, this will only work if you stick to your budget and ask the entire family to get on board.

    The first couple of months might be hard, especially if you’re not used to paying so much attention to how you’re spending. But, once you get used to it, you’ll be wondering how you’ve managed before.

    5.    Pay Off Your Debt

    While there are millions of financial goals you could be setting, paying off your debt should be your number one priority.

    If you’ve followed the steps above so far, you’re at the phase when you’re able to save some extra cash and we strongly suggest you invest in early debt payment.

    There are free online tools like Free Online Calculator Use which can help you calculate:

    • how much extra money you can invest
    • how faster you can pay off your debt

    Look at this as an investment. The moment you pay off your debt, you’ll have all that extra money to focus on other goals you’ve set.

    “Paying off your debt should be the top priority of your family finance management. Once you get rid of that major expense, you’ll be able to invest your money into whatever you want,” says Melanie Faber, a budget analyst and editor at Classy Essay.

    Also, make sure you read, research, and investigate about debt. You can check out Arrest Your Debt to get all the answers and the latest information about paying off your debt.

    6.    Create A Savings Fund

    If you don’t have a debt to pay off, or you’re working on it, you should also consider creating a savings fund for you and your family. Saving money is another goal you have to set for yourself.

    A savings fund is always a great idea and here’s why:

    • there could be a global crisis like with COVID 19
    • you could lose your job
    • there can be unexpected expenses

    A savings fund will create a sense of security and prevent you from stressing out about what’s going to happen tomorrow or any other day.

    This is why we strongly recommend you set aside a fixed amount of money every month and don’t reach into that fund unless you absolutely have to.

    7.    Invest

    Once you regain control of your finances, you can start thinking about making wise investment decisions and find a way to increase your monthly income or secure financial stability in the future.

    There are all kinds of investment opportunities you could seize:

    • stocks, bonds, and mutual funds
    • real estate
    • retirement plans
    • startup businesses
    • crowdfunding

    Making the right investment choices will help you grow your money and further stabilize your monthly income.

    It would also be a great idea to write down an entire, detailed investment plan and set a time frame for achieving your investment goals. If you need help with writing your plan, you should check out writing services and tools such as Write Scout, Studyker, Top Essay Writing, or Grammarly.

    Final Thoughts

    As you can see, tracking and managing your personal finances can be extremely beneficial for your future and help you achieve all types of goals you set. This is why you should take it seriously and give it your best to take control of your finances.

    The tips and tools provided above can help you start working on your new financial plan today. Use them to make wise choices and improve your financial status as soon as possible.