6 Tips for Effectively Managing Your Personal Finances in 2022

by Emma L. Business consultant

WManaging personal finances was never an easy task. The last couple of years, however, made sure to make this already tricky situation even more complicated. The outbreak of COVID-19, massive layoffs, the European crisis, inflation, and an ongoing labor shortage are only some of the countless issues that are keeping the economy and our personal finances from getting back on their feet and setting foundations for a carefree future.

But, the fact we have to deal with all these amassed problems doesn’t mean we should simply give up and leave things to chance but rather double our efforts and handle these issues like pros. Questions like: how to double my income, or how to unfreeze Venmo account will no longer be an issue.

Keep better track of your expenses

So, let us take a look at some of the most effective money management tips that should help you make sense of this mess and come out of any financial challenge as a winner.

Keep better track of your expenses

This is an absolute requirement if you ever want to bring some order into your personal finances. One of the main problems we face while doing that is being 100% sure about where you spent each cent and on what is much harder than it seems. That is why you should do your best to eliminate the cash and pay as many things as possible with your credit card. Most banking services will allow you to easily get access to all transactions you made the previous month. The rest can be easily handled by some of the available expense tracking apps. Recording all these expenses will automatically help you cut unnecessary waste.

Create a monthly budget

Every effort is easier to pull off if you have a good plan for how you're going to do that. Managing personal finances is really no different. So, no matter how much you are trying to cut expenses, you won’t get the results you want if you don’t have a budget to steer your efforts. We suggest that you start your efforts with some easy method like for instance 50/30/20 rule where you will allocate your after-tax income into the following groups:

· Needs (50%) – The fixed expenses, utilities, installments, debt repayment, etc.

· Wants (30%) – The things you enjoy but are not necessary for seamless living

· Savings (20%) – The money you are going to put aside for some other times

Use the coupons and reward points

Even though some of these things may seem insufficient to turn your personal finances around, when stacked together various coupons, reward points and vouchers can relieve a lot of pressure off your monthly budget. Let’s go to Australia for example. The local American Express David Jones credit cards reward the consumer for every purchase made off these cards. These reward points can later be spent in a gas station, various retail chains, and so on. Also, people with focused spending habits (e.g., frequent travelers), can use specialized credit cards built around their specific needs for getting bigger discounts.

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Focus on quality rather than savings

You have probably heard the old proverb saying that ‘you are not rich enough to buy cheap things.' In most cases, this way of thinking does prove to be right. Cheap sneakers need to be replaced more often, cheap phones break down in a matter of months, and cheap cars spend most of their lifetime at repair shops. But, how can you afford the quality goods when they are so expensive? Well, start by focusing on the items you truly need and that make a change in your daily life. If you are still unable to get all things you need, you can consider leveraging personal loans. Just stop wasting money on poor-quality junk.

Set goals and work toward them

Setting goals is an incredibly good way to keep yourself motivated and put more effort into whatever money-saving strategies you might be using at the moment. Furthermore, having a clear finish line you need to work toward will help you trace back the steps you need to make to get there and come up with new budgeting strategies you haven't previously thought off. Going back to the topic we have just covered, using the big purchases we have mentioned above can do a great job in setting small milestones you need to pass. Gradually this goal-based mindset will transition from conscious effort to a healthy financial habit.

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Diversify your income

Last but not least, we would like to point out that, in spite of your best efforts, you can stretch your finances only so thin before they start falling apart. This is the point where the only way to make more room in your budget and afford the things you truly need is to diversify your income and start earning more. That brings us to the funds you were putting aside as a part of your 50/30/20 budget. This money is, admittedly, much more valuable if used to make more money. So, start researching safe investment options and consider using at least a portion of these resources to where they’ll make the biggest bang.

We hope these few examples gave you a general idea about the strategies you can use to successfully manage your personal finances and always have enough money you hold the most important. That will not be an easy task, and these six suggestions make only the tip of the personal finance management iceberg. But, they should definitely put you in the right direction. And from that point, every step you make will be a step closer to your goal.