Tips for Effectively Managing Your Money

For whatever reason that causes some of us to wind up in a financial hardship, many turn to credit cards in an effort to rescue themselves from this temporary crisis. Then there are some of us that tend to use them for everything. It is no wonder with those artfully-crafted commercials designed to appeal to our sentimental side, telling us credit cards are the answer for everything that truly matters in our life. The harsh reality is that it may be one of the main causes toward the detriment of our financial health.

Some statistics suggest many Americans carry an average balance of $9,200 on 2.5 credit cards. If this is the case, it is like tossing out of the window thousands of dollars annually on finances charges alone.

We need to rethink our old spending patterns and learn how to organize finances in such a way that will contribute to our overall monetary successes. The process is not all the hard when you first set realistic goals.

Setting Financial Goals

Goals for each person can be as different as we are individually—especially financial goals. There is no right or wrong way in deciding what financial goal(s) you would like to accomplish in the next five or ten years—or even in your lifetime. Sit down and decide what you would like to accomplish in the short and long-term aspects of your life. Maybe you would like to:

• Begin setting aside money for an emergency fund in case of a financial crisis.
• Payoff all credit card debt.
• Save for a down payment on a house.
• Be able to afford college for your children, or aspire to further your education and return to college.
• Take a once-in-a-lifetime vacation.
• Be able to afford to retire someday.

After you have decided what goals you would like to achieve, the next step is to develop a beneficial system, one that best suits you and your lifestyle and helps you attain those goals.

It may be that setting a budget is the best way, or tracking your finances if you find budgets too restrictive—maybe even consolidating your debts into one payment system.

There are many free personal finance tools available online like Mint.com that can help you effectively manage your finances. The software at Mint can be used to:

• Pay off a credit card debt;
• Purchase a vehicle;
• Save for retirement;
• Create a personal budget.

FinancialFate.com is a new and revolutionary do-it-yourself financial planning software. It is designed to be used by individuals with no formal financial planning or training.  One amazing thing is it can tell you at a glance if your money management practices are leading you in the right direction or astray.

AceMoney Lite is free personal finance software that offers a simple user interface. It has a variety of personal finance reports, budgeting and investment tracking support and e-commerce features including:

• Being able to track your spending habits to see exactly where your money is going.
• The ability to create and manage budgets.
• Track performance of all of your investments.
• Enjoy the convenience of on-line banking.
• Never pay a late fee again since it shows you when your next bill needs to be paid.

Consolidate Debts

Consolidating debts may be another option to avoid paying high-interest rates on credit cards or multiple outstanding loans. Having one payment instead of several payments will allow you to pay off your debt sooner and usually lowers your overall payment.

Shop for a loan with various banks and fianancial institutions to pay off those debts, or switch to a credit card offering no-interest or low-interest for a certain period and pay it off. However, read the fine print on low or no-interest credit cards to make sure the interest rates do not go though the roof if not paid over short term.

Pay Bills Directly

Have bills paid directly through auto-draft. Have car loans, mortgages, etc., directly drawn from your account. This will eliminate paying any possible late penalties while saving money on stamps.

These are a few simple tips to set you on your path for effectively managing your money and finances.

Special thanks to Princessa for posing the HubMob Weekly Topic:Tips for Managing Your Money, Finances, Taxes and Investments. To ProCW for the creation of the awesome graphic and shawna.wilson for giving me heads up.

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