During challenging times, there’s nothing more stressful than trying to manage your money—especially if your cash flow has been disrupted.
Having expenses like rent or mortgage, groceries, student loans and other debt can make it difficult to align your monthly spending with your paychecks. Fortunately, there are new tools available to help you manage your money smarter. Alongside commonsense strategies, these tools can take some of the worry out of managing and understanding your finances.
Use a budgeting app
While the concept of budgeting can feel intimidating, it simply means knowing exactly what your monthly income is and then tracking your necessary expenses each month (like rent, utilities, food, transportation, insurance, student loan payments). Once you have a handle on your expenses, take a good, hard look at your “discretionary spending.” This is where you need to trim when money is tight.
Adding up your fixed expenses and subtracting that amount from your income gives you a quick picture of what you have leftover to spend each month. But sometimes it can be more complicated than that, such as if you have part-time income or gig work, or fixed expenses that do not occur monthly.
If spreadsheets are your thing, you can create your own system for tracking income and spending over several weeks to see where your money is going and figure out where you can cut down on unnecessary expenses. But if you’re looking for a ready-made app to help you with budgeting, try tools like Mint, You Need A Budget or Pocket Guard.
Knowing exactly what you earn and where you’re spending your money is just the first step toward managing your money more thoughtfully.
Buy now, pay later
Another step to smarter money management is avoiding the trap of overusing credit. For example, instead of relying on high-interest credit cards to make a purchase you don’t have the cash for right now, consider using the buy now, pay later apps (NBPL). Many retailers have partnered with buy now, pay later apps to make it easier for people to make purchases on their websites. These BNPL apps are similar to credit cards because they allow you to buy something today and pay for it over time. One of the biggest differences, though, is that many do not charge any interest if you make the scheduled payments. Which are the best BNPL apps? There are many out there but QuadPay, Affirm and Klarna have gotten great ratings.
Build an emergency fund
Life happens. You can be on top of your finances one day and the next there’s a car repair, medical bill or other expense you didn’t anticipate. One way to help guard against these unexpected expenses is to set aside an emergency fund. Setting aside a little bit each week can add up to enough savings to handle the unexpected curveballs life throws your way.
A painless way to set up a rainy-day fund is to have a small portion of your paycheck deposited into a savings account each pay period. Start with a small amount that you think you can do without, and before long you may realize that you can get by; you may even forget about the money. Aim to have three to six months of expenses set aside in case of an emergency.
Following these steps can help you stay on the road to better money management, relieving some stress and worry at the same time.