Simple Steps to Start Mastering Your Financial Life

Managing personal finances is a source of stress for many Americans. Despite 84 percent of Bank of America and USA Today respondents expressing confidence in their ability to manage their finances, less than one-third of Millennials say they feel “very confident” in their financial management skills, according to a survey by investment app Acorns.

One way to feel more confident about money management is realizing that you can approach it as a goal similar to losing weight. Just as weight loss programs aim to lower calorie intake while boosting exercise output, you can break financial management down into three goals: spending less of your income, saving more and earning more.

Spend Less of Your Income

A first step toward getting your finances into manageable condition is spending less of your income. A good way to go about this is by following the 50/20/30 budgeting rule. This budgeting guideline prescribes allocating 50 percent of your monthly income toward fixed expenses such as rent, car payments and insurance; 20 percent to savings and repaying debt; and the remaining 30 percent toward discretionary items such as entertainment, dining out or new clothing purchases.

If your monthly expenses are high enough that you have trouble fitting your spending within these guidelines, you may be living above your means and may need to make adjustments to make your spending sustainable.

Start by reviewing your discretionary spending to see if there’s anything you can cut to bring your budget under control. For instance, could you eat out less often?

If you’re still spending too much after cutting your discretionary spending, review your fixed expenses to see if there’s anything you can trim. In some circumstances, this may mean moving into a less expensive residence or driving a less expensive vehicle.

Save More per Month

One goal of spending less is being able to save more. As the 50/20/30 rule indicates, setting aside 20 percent of your monthly income for savings is ideal. However, if you owe debt, you can shift a portion of your budget to paying it down.

Personal financial expert Dave Ramsey recommends saving a $1,000 emergency fund before paying off your debt with the smallest balance. Other financial advisors recommend paying off your highest non-mortgage interest debt first.

Once you’ve achieved these goals, you can focus on other savings goals. These should include saving up enough to live on for six months to a year in case you lose your job, followed by building your retirement savings fund. After some progress on these fronts, you can start pursuing goals such as building college savings funds and paying off your mortgage.

Increase Your Earnings

To bring your spending and saving habits in line with your budgeting goals, it may be necessary or helpful to increase your earnings. One way to do this is by getting a better paying job.

Another option is to multiply your income streams by investigating freelance or contractual opportunities utilizing on-demand work technology platforms such as Fiverr or TaskRabbit, or direct selling business platforms such as Amway.

In some cases, such gig economy opportunities can serve as a doorway to employment with the company sponsoring the platform. In Amway’s case, the company routinely posts many job opportunities within the Amway organization in addition to business ownership opportunities.


Arnel Ariate is the webmaster of Money Soldiers.

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