If you don’t consistently manage your personal finances, you could see your income disappear right before your eyes. As founder and CEO of Everest Business Funding Scott Crockett says, small expenditures here and there add up, eating away at the extra income you may have without you even noticing.
Even if you believe you are managing your personal finances well, there are always steps you can take to improve your financial standing. If you’re looking to control your finances better and put yourself in a more advantageous economic situation, follow some of the tips below.
Create a Budget
The first step in any money management plan is to create a monthly budget. This financial plan will help you see how much money you bring in and how much you spend on expenses monthly.
After you list all your recurring expenses — housing, food, transportation, etc., you can create spending buckets where you want to allocate your funds. This could include long-term retirement savings, short-term spending savings, and discretionary funds.
A budget will help you adjust your money to your lifestyle and show you areas that you might want to cut back or change.
Creating a budget in and of itself won’t improve your personal finance management. It’ll only provide you with a roadmap to do so.
If you want to handle your personal finances better, you need to track how much you’re spending each month. The best thing to do here is to approach this on a multi-month basis.
For example, track your expenses to the penny over the next three months. Then, categorize your spending based on the buckets you created in your budget. Finally, match the actual numbers up to what you projected in your budget.
Do they match up? If not, what categories are off, and by how much?
By tracking your expenses, you’ll be ensuring the budget you set is realistic. It’ll also help you identify areas where your money may be flying out the door, such as ordering takeout too many times a week.
Reduce Extra Expenses
Almost everyone has extra expenses they can cut back on. Tracking your spending will help you identify those expenses.
One of the most common culprits today is monthly subscriptions. These expenses can add up quickly, from streaming services to credit monitoring to any other membership.
Are you using all of the subscriptions you’re paying for each month? If not, cancel them to save some money.
Build an Emergency Fund
Even if you create a solid budget and always stick to it, there will still be unexpected expenses that arise from time to time. To help ensure that your financial plan doesn’t get thrown off the rails when these surprises happen it is vital to have an emergency fund set aside.
Scott Crockett suggests that you should have anywhere from three to six months’ worth of expenses set aside in a separate savings account that you can access quickly if you need it. This will help cover expenses should you lose your job, get sick or injured, or need to make a fast home improvement.
It may take time to build this emergency fund, but that’s OK.
About Scott Crockett
Scott Crockett is the founder and CEO of Everest Business Funding. He is a seasoned professional with 20 years of experience in the finance industry. Mr. Crockett’s track record includes raising more than $250 million in capital and creating thousands of jobs. Scott has founded, built, and managed several finance companies in the consumer and commercial finance sectors.