Many schools fail to incorporate the subject of personal financial management into their teaching systems, and everyone has to deal with this issue later in life. Take the United States for example 58% of Americans have no retirement plan and don’t know how to handle their finances in old age. It is generally believed that you need to have savings of US$300,000 to support your retirement life when you retire, but in reality, the average American only has US$250,000 by then. The average credit card bill per household is $152,000. If these statistics are a wake-up call for you and you want to turn the tide, here are some specific goals you can set to help you live a better life.

Method 1: Make a Budget

• Track all your purchases for a month. You don’t need to constrain yourself, as long as you know roughly how much you spend a month. Save all your receipts, track how much cash you spend, how much you spend on credit cards, and see how much money you have left at the end of the month.
• At the end of a month, take a close look at how much you spent. Don’t write down how much you “hope” you spent, write down how much you “actually” spent. Summarize your expenses.
• Now, write down your actual budget. Budget your monthly spending in each category based on your actual monthly spending and your spending history. If you prefer, you can also take advantage of some online budgeting platforms.
• Be honest with yourself about your budget. It’s your money – there’s no need to lie to yourself about how much you’re going to spend when you’re budgeting. Otherwise, you are the only one who suffers. On the other hand, if you don’t know your expenses, your budget may take months to implement. Also, don’t write down any unrealistic numbers until you know what’s happening.
• Track your budget. The hardest part about creating a budget is that your expenses vary from month to month, but the benefit is that you can record all changes in real-time, giving you a clear idea of where your money is going throughout the year.

Method 2: Spend Money Successfully

• Don’t buy something you can borrow/rent. Do you often buy a DVD and then leave it gathering dust for years? Books, magazines, DVDs, tools, party props, and sporting goods are all available for rent for a small fee. Renting often saves you the trouble of maintenance and upkeep, frees up space in the storage room, and makes you appreciate it more when you use it.
• If you have enough money, make as big a down payment as possible when buying a home. For most people, buying a home is the largest and most important expense in their lives. Therefore, it is important to utilize your loan wisely. Your loan repayment goal should be to minimize interest while balancing the rest of your budget.
• Understand the importance of having a credit card to build credit. A credit card with a good credit score may be able to get you loans with ultra-low interest rates and new loans, which is nothing to sneer at. Even if you rarely use a credit card, having one is necessary. If you can’t trust yourself, you can lock it in the cabinet.
• Spend based on how much you have, not how much you want to make. You may think that your income is high, but if your actual financial resources are not, then your current spending habits are simply shooting you in the foot. The first rule of thumb when it comes to spending money is this: Unless it’s an emergency, only spend what you have, not what you expect to earn. This way you won’t have any debt and can plan for the future.

Method 3: Smart Investment

• Learn about various investment options. As you get older, you realize that the entire financial world is far more complex than we imagined as children. Some trade “imaginary” commodities, there are those who place bets on things that have not yet happened in the future, and there are those who trade stocks. The more you know about various financial instruments and investments, the wiser you’ll likely be when making your investments, even if sometimes the only wisdom needed is knowing when to call it a day.
• Take advantage of pension insurance provided by your employer. Some pension insurance plans may allow you to automatically transfer a portion of your salary into savings. This is a great way to save money because pensions are deducted before wages are paid; most people won’t even notice they’ve paid into their pension.
• If you want to invest in the stock market, don’t play with the odds. Many people try day trading, placing small bets on individual stocks each day. This trading method is an effective way to make money for experienced people, but it is very risky and is more like gambling than investment. “If you want to invest safely in the stock market, make long-term investments.” That is, make investments for 10, 20, 30, or even longer years.
• Have a good insurance plan. Smart people often plan for the unexpected. You never know when you will need a large sum of money in an emergency. Having a good insurance plan can help you weather the storm.
• In addition to the insurance benefits provided by the company, you can consider protection plans provided by other insurance companies or banks. You can talk to a financial or insurance advisor. This kind of out-of-company insurance plan usually allows you to invest a sum of money into an insurance plan that can be withdrawn when you retire or reach a certain age.

Method 4: Create a Deposit

• Start by preserving as much of your spendable income as possible. Make saving your top priority. Even if your budget is low, you can save some and save 10% of your total income.
• Start an emergency fund. Deposits are reserved income that can be consumed. Having a consumable income means being debt-free, and being debt-free means being prepared for emergencies. Therefore, an emergency fund commonly known as a rainy day fund can help you save money.
• When you start saving for retirement and put money into an emergency fund, you can set aside 3-6 months’ worth of consumption. Deposits are made to prepare for uncertainty. If you’re unexpectedly laid off, or your company cuts your rebates or commissions, you don’t want to be in debt. Set aside 3, 6, or even 9 months’ worth of spending so that you’ll be able to cope even if something unexpected happens.
• Once you have a fortune you need to pay off your debt. Whether it’s a credit card bill or a mortgage, having debt can seriously affect your ability to save money. Start with the liability with the highest interest rate. (If the highest-interest debt is your mortgage, try paying it off in a larger amount, but deal with the non-mortgage debt first.) Then pay off the debt with the second-highest interest rate. Pay them off one by one until all the debts are paid off.
• Actively prepare for retirement. If you are about to enter middle age (45 or 50 years old) and you have not saved for retirement, it is time to increase your pension immediately. Pay as much money as possible for pension insurance every year; if you are over 50, you can even make additional contributions to your pension.

Tips

• Improve personal abilities. Spend more time improving your knowledge and skills so that you can rank higher among many competitors. This will improve your chances of increasing your income in the future.
• If the number of foreclosed homes is growing, then this is not a good time to invest in buying a house, because banks will have more incentive to redeem the houses, and the law of supply and demand will result in further declines in house prices.
• When banks auction off all foreclosed homes, the law of supply and demand will cause housing prices to rise again.
• As long as there aren’t a lot of foreclosures, you can keep the property because home prices will go up.