Good money management skills make it easier to manage your debt, achieve good credit and reach your financial goals.
If you’ve faced problems with debt or your credit, part of the cause may have been that you simply didn’t have the right financial strategy for your needs. It may be that saying that you’re living a champagne lifestyle on a lemonade budget. Or maybe you had the right money management plan day-to-day but didn’t save enough and one big emergency (or a series of them) threw you off track.
Whatever the situation was in the past, now that you’re taking control of your financial life, you need develop better money management skills moving forward. This involves basic things, like building a budget and finding smart ways to save. But even though these things are basic, most people miss them. And if you start doing them, it will be much easier to maintain financial stability and achieve your goals.
How does the average budget break down?
According to the Bureau of Labor Statistics (BLS), here’s how an average American household breaks up their spending:
|Percentage of Budget
|Cash contributions (401k, IRA)
- The average American spends 56% of their food budget on groceries and 44% dining out
- 40% of transportation costs go to the vehicle, while 21% goes to gas and oil and the remaining 32% covers maintenance and repairs
- One third of housing costs cover the mortgage or rent payments, other costs include decorating, repairs, HOA fees and assessments, and insurance
What’s more a Gallup poll found that only one-third of Americans budget and only 30% have a long-term financial plan. It’s no wonder that half of Americans currently live paycheck to paycheck. If you don’t want to live like that, then you need to focus on good money management habits.
Learning how to budget is a key financial skill that can keep you out of debt and help you get to your financial goals that much faster. A good budget builds in savings and leaves free cash flow to cover emergencies. But budgeting has a bad reputation, so most people just don’t do it. However, budgeting doesn’t have to be a hassle! Once you find the right budgeting strategy, maintaining a budget can become a financial habit you can keep.
Smart money management
Beyond basic budgeting and saving, there are other concerns that throw off even the best laid financial plans. Learning how to navigate financial challenges can be the key to overcoming them quickly. Often it just takes the right mindset to get on the right track when you face a financial hurdle.
Most of us never had a class in school about personal finance. As a result, people are often lacking some of the basic knowledge it takes to be financially successful. If you don’t know the “language” of personal finance, then sometimes even Google can’t help you. You simply don’t know what to search for. That’s why we created this handy personal finance glossary to give you the tools you need to ask the right questions