So, you’ve been working toward your financial goals for years now, and finally, all the work has paid off, and you’re making money. But what should you do with it all? Do you know how to manage your money? Do you know how to make more? Are there things you need to spend your money on before you can start enjoying it? Whether you’ve made your money steadily or you’ve come into a large sum overnight, there are some key things that you should do with it to make sure that you keep your money and continue to make it.
Clear Your Debts
Clearing your debts is the absolute first thing that you should do above all else when you have enough money. Whether it’s student debt, credit card debt or a loan from a friend or family member, then pay it off. You’re not doing yourself any favors by putting it off, interest will continue to accumulate, so if you can start making payments immediately, you will ultimately save money.
Check a loan payoff calculator to determine how much and how often you can pay it off while still paying for your essentials so that you can make sure to be debt free as soon as possible. If you don’t work out this maths, then you might find yourself paying the minimum payments and not owning your debt. Once the debt is gone, then you can finally think about making your money work for you, where you can invest it and how to make it make more.
Get To Know Your Cashflow
Do you ever get to the end of the month and wonder where all the money has gone? You know how much you earn; you know how much your bills are but are you really learning about your money and where it’s going? From the money that comes in, there will be taxes, retirement contributions, and insurance payments that need to come out.
If you’re sorting these out yourself, then you will have a better idea, but if you are working through an umbrella company or are employed by a company, then these payments probably come out before you even see your salary. To really know what’s happening with the rest, download a money management app which will enable you to have transparency of all your accounts in the one place. You’ll be able to manage what your spending far easier than you ever have before and this will keep you on top of things and out of debt.
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Budget
Now you understand what you are spending and what you need to spend, then you can make a budget for each month and stick to it. It might feel like you’re restricting yourself at first but actually, if you stop frittering money away into thin air, then you’ll soon realize you have far more financial freedom than you’ve ever had before.
Start Saving
Once you have worked out what you have left, you can start to put some money away into a savings account. Choose wisely and pick one with reasonable interest rates and one that you automatically transfer money to each month.
Invest Your Money
While it’s great to put your money away and have it build up gradually, it’s also good to invest your money and help it grow quicker while keeping it safe. If you’re in the US, then you could invest in a 401k which allows you to invest money for retirement as well as receive free money from your employer while doing so or a Roth IRA which is another tax-advantaged retirement account.
If you really want to make more money, then educate yourself on investing in stocks, start-ups, property, gold, or bonds. If you already have some knowledge of the property market, for example then use it to your advantage and put your money where you know it’s guaranteed to grow. Or if you have the time, then learn about it. Learn from the experts because you probably can’t afford a bad investment, who can?
Decide On Your Goals
It is very wise to have some goals in mind for what you want to do with your money or how much you’re trying to save in a certain amount of time. This helps you to focus rather than just aimlessly saving for a rainy day. If you don’t have a goal to work towards, it’s easy to dip into your savings and not really think about it. Whereas if you know you’re working towards buying a house, you have a figure in mind and a date of when you want to achieve it then you’re far more likely to do it.
Educate Yourself
Managing money isn’t easy and if you’ve now got a lot to play with them one of the most valuable things you can do for yourself is to up your financial IQ by reading books on money management or investing. You don’t even need to be particularly rich to have a money manager, and you can usually get a free consultation where they can help you to see what your options are.
Keep An Emergency Pot
It is very advisable to have some funds which you can dip into should any emergencies arise such as if your car breaks down, you have a medical emergency, or your laptop smashes.
Invest In Yourself Now you’re making money you can start to put some back into yourself and into your business to make even more. Invest in technology to make managing your business more efficient such as small business accounting software or a new camera for more professional photos for your business.