The median net worth in the US for people between the ages of 45 and 54 is $168,000. However, the average net worth for this same age range is much higher, coming in at $833,200.
For the next lower age bracket, Americans between 35 and 44, the median and net worth is about half of that, coming in at $91,300 and $436,200, respectively.
A person’s net worth is the total amount of assets they have minus the debt they carry. Whether your net worth seems high or low compared to these medians and averages, learning how to manage money is an important part of financial health.
Are you looking to learn more about how to manage money? Let’s take a look at some money management tips to help improve your financial health.
1. Take a Look at Your Current Financial Situation
Sometimes the first step can be the hardest. If you feel overwhelmed by your finances, you might be afraid to even look at the details of your current financial situation. However, it is necessary to be brutally honest about your income, expenses, and debt in order to move forward.
Use a spreadsheet or download accounting software in order to input all of your financial information in one place. This can help you get a realistic sense of the state of your finances. You might even look into the best money management apps so that you can have your info with you everywhere you go.
2. Set Up the Right Bank Accounts
You’re going to want a checking, saving, and investment account when it comes to bank accounts. Your checking account is for spending cash while your savings account is for long term savings. Opening an investment account can mean that your money work harder for you while it is stored away.
3. Make a Budget
Having a budget is essential if you want to know where your money goes and have a plan for money you will receive in the future. It is all too easy to find yourself short on money when you don’t have a plan.
In order to make a budget, you will want to look at your monthly income as well as your monthly expenses. Break your expenses down into essential and nonessential expenses. Be sure to have some money that you can put towards paying down debt or into a savings account every month.
4. Set Financial Goals
Setting financial goals is one of the money management tips that can really help you change your financial life. When you set goals for yourself, it can help you stay motivated and focused towards getting where you want to be.
Take some time and seriously consider what you want to do with your life and what you will need financially to make that happen. This can help you set goals both short and long-term that will set you up for success.
5. Take Five Minutes a Day to Check-in With Your Budget
Staying on top of your budget is vital when you are learning how to manage money. You need to know where you stand in order to make progress. For this reason, it is worth taking five minutes every single day to check-in with your spending and your budget.
If this sounds annoying or overwhelming, consider the ways in which it can help you catch problematic spending before it becomes a disaster. It is better to look at your financial situation for five minutes every day than several agonizing hours every month.
6. Create a Plan For Paying Off Debt
When you include mortgages, the average American has $90,460 in debt. While having debt is a standard money management strategy these days, having too much that can leave you feeling like you are drowning.
Paying off debt can completely change your ability to save for the future. Rather than ignoring the reality of debt because it is unpleasant, consider coming up with a repayment strategy to help you get ahead rather than simply keeping your head above water.
7. Understanding the Meaning of Your Credit Score
For better or for worse, your credit score can have a major impact on your finances. When you apply for credit cards or loans, lenders will take your credit scores into account when determining your interest rate as well as whether or not they will give you a loan at all. When you are applying for a large loan like a mortgage, a slightly lower interest rate can end up saving you multiple thousand dollars.
It’s a good idea to understand what your credit score means and how to improve it. It takes time to build your credit back, so consider beginning your campaign to heal your credit a while before you are going to apply for a loan.
8. Plan For Retirement
Most working people have a dream for what they will do when the day comes to retire. However, you want to make sure that you have the funds to make that dream a reality. To learn more about how to plan for retirement, check out Henson Crisp and their top ten tips for retirement planning.
How to Manage Money: Find Your Reason
If you are interested in having a healthy financial life, you might find that using money management apps and using some of these techniques can help you succeed. However, probably the most important thing is finding your reason why.
If you don’t know why you are working so hard to manage your money, you will probably reach a point of personal finance burnout. So take some time and look within yourself to figure out what it is you’re working towards. Perhaps you are interested in having time and money to put towards a hobby, paying off oppressive debt, or living a financially independent life.
No matter your reason, checking in with yourself can help you be more successful in your money management.
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