Have you ever worried about whether you are managing your money correctly? This is a question we all have probably pondered at least once in our lives. Money is very important for our daily lives and our future, so it is completely normal to worry about whether we are on the right track to a safe and secure financial future.
Keeping money in the right place is essential for our financial goals. However, the right places are generally different for everyone. If your money is being kept in the right place for you, you will have a clear understanding of where your money should go when the paycheck comes in, you will know how it will grow over time, and you will know what you plan to do in the future.
Here are a few signs that tell you that you are on the right track.
You are not living paycheck to paycheck
As we go through life, we get saddled with more and more commitments. We have to pay the bills, pay off our loans, ensure we have the bare necessities, and eventually we have to purchase our own home and even start a family. A lot of these responsibilities will cost money, and we may eventually find ourselves trying to pay off multiple bills and loans at the same time.
The trick is to ensure that we are not buried under so much debt that we are left with no savings after paying off your monthly expenses. This is by no means easy, but it is not impossible. By doing your homework, proper financial planning, and carefully choosing the right loans, plans, and policies, you can ensure that you aren’t living paycheck to paycheck each month. The extra cash saved can be added to your savings, or maybe even invested to help grow your wealth.
You have a full emergency fund
Emergency funds are incredibly important for any person. It acts as a buffer for your finances in case something unexpected happens and you need to pay out a sum of money at a moment’s notice. A full emergency fund means that you will not have to worry about taking on credit card debt or needing a loan if you suddenly lose your income or face a medical emergency.
A general rule of thumb is to have at least three to six months worth of expenses saved up in a safe and accessible place, such as a savings account; though ultimately, the amount you should save for your emergency fund is ultimately dependent on your personal needs. If you want even more security, you might consider growing your savings account to a full year’s worth of expenses.
The markets do not worry you
For most people, a long-term investment strategy is generally a good idea in order to build wealth over time. A key part of this strategy is also not needing the money that you have invested in order to pay your bills. Almost all of your investment money should be some of your extra disposable cash that will not be used for your essential purchases and payments. This way, you can leave your investments alone as the market rises and falls, making up for potential losses over time, rather than panicking over every dip in stock prices that happens.
What matters is that you are confident in your investing strategy and can resist the urge to pull out all your money the second the market drops. If you can do this, then you are likely keeping your investments in the right place.
Your savings are growing on their own
If it seems like your cash savings are growing at a steady pace every time you check, then you are probably keeping it in the right place. Not every savings account earns much interest. Try looking around for the best interest rates at different banks in order to find one that suits your fancy.
Another part of growing your savings is through regular deposits. Setting up automatic transfers into your savings account on a regular basis means your balance should be rising each time you check in. You can also keep your cash in places such as your emergency fund or a future down payment. As long as said savings are somewhere that results in them growing over time when you are not using them, then they are probably in the right place.
Your eggs are not all in one basket
Some people might believe that it is fine to just save up all their money into a single account. While saving money certainly is a good habit, your wealth is not going to do much growing by just sitting in a simple savings or fixed deposit account. What you really need to do is diversify your income. Investing is one such method of diversification. However, don’t just invest in one single thing either. spreading your investments among a wide variety of securities and funds, just in case one or more doesn’t do so well.
The more avenues you try to put your money into, the greater the chance that one of these avenues will help your money grow. At the very least, it might be able to cushion you against the repercussions, should other avenues hit a dead end.
You have a clear financial plan
Financial plans help to paint a comprehensive picture of your finances, your goals, and any strategies you devised to reach said goals. A good financial plan will include details about your cash flow, savings, debts, investments, insurances, and any other financial aspect of your life.
While it is generally an ongoing process, having clear goals and the knowledge of where your finances stand at all times is extremely beneficial and a great advantage when it comes to managing your money. A financial plan allows you to make the most of your assets and gives you the confidence to weather the storm during tough times. You can create a financial plan by yourself, or you can enlist professional help to draft one out for you.
Learn how to budget and track spending effectively
If you are not sure how to get started on your financial plan, a good place to start would be through the creation of your own budget and financial checklist. You can try using the iMoney budget planner and expense tracker to help kickstart your future money management strategy.
Using it is exceptionally easy. Simply key in your monthly and input your expected monthly expenses for each category. You don’t have to be exact, a rough estimate will do.
After entering these details, you will receive a detailed budget breakdown that shows you how much of your income is going into your monthly expenses.
It also provides you with unique and helpful insights that can offer you advice on how to proceed. With this summary, you can further plan out how your expenses will look like in the following months.
The total amount of money you are currently earning and spending monthly might even surprise you, once you see it listed down.
Why not try this Budget Planner and Expense Tracker now, its free!