This can sometimes be a challenge and learning to be financially savvy does take time and discipline.
We have five common-sense tips that you can easily implement today and use as a foundation for managing your money effectively.
1. Create a budget
If you’ve never created a budget, it’s worth doing as it will give you an overall view of your finances and help give you control over your money.
Your budget should include how much you have coming in and how much is going out over a period of time.
Be as detailed as you can and look at your bank statements so you don’t miss anything. You might also want to speak to a Mortgage Choice adviser about taking advantage of our cash flow coaching software MoneyTrack to help you get more accurate picture of your true expenses over time.
Drawing up a budget helps you work out where you can reduce your spending and plan for expenses such as buying a car or going on a holiday.
2. Set up an emergency fund
It’s easy to fall into a trap of living pay cheque to pay cheque, but this will become a problem when an unexpected event occurs.
Whether it’s a loss of a job or a medical bill, you can never know when you might need extra funds to cover costs or make ends meet.
You can be prepared by regularly setting aside a portion of your income into a separate account.
Your emergency fund should ideally have enough to cover about two to three months of expenses including rent or mortgage repayments, groceries, transport and utilities bills.
3. Shop around for a better deal
You wouldn’t buy a new TV or washing machine without comparing a few different stores and choosing the one that has the best price.
This same tactic should be used for our gym memberships, phone plans, insurances and home loans etc.
In a competitive marketplace, product and service providers are all looking to retain and bring in new business, which is great for consumers.
Take the time to do plenty of research so you can be sure you’re getting the most bang for your buck.
When it comes time to renew a service, don’t be afraid to ask for a better deal especially if you’ve been a long-term customer.
4. Reduce your debt
Debt will make it hard for you to manage your money effectively so in most cases it will make sense that it should be a priority to eliminate it.
Look at how much you currently owe and work out which one you will pay off first. It could be the one with the highest interest rate or just the smallest debt.
You can be disciplined in paying off your debt by making the payments automatic on your bank account.
If it’s possible, try to pay more than the minimum as this will reduce the interest charged and you can pay off the debt faster.
5. Have savings goals
Setting goals will make it easier for you to save money as you will be motivated by what you want to achieve at the end.
You should set short-term and long-term goals and make sure they’re specific, measurable, achievable, relevant and timely.
With the help of your budget, you should work out how much you need to save and the time it will take to achieve it.
Write your goals down and look at them regularly so you don’t lose motivation.
These tips are just a starting point and if you require professional advice, speak to your local Mortgage Choice financial adviser.
They will look at your financial situation and create a personalised and structured plan for you to achieve your goals.