Financial Management Flipbook_2023

Cash Management Improving Your Financial Position Start by taking control of your cash flow: 1. Assess your spending. You cannot make sound decisions about your money if you have no idea where it’s going. Once you see where you might be wasting money, you can put it to work more productively. 2. Build a cash reserve or emergency fund. This is the “rainy day” money you set aside for life’s surprises. 3. Pay down credit-card debt. Credit cards are a double-edged sword. Most people rely on them as a financial convenience, but credit cards have a “dark” side too, namely their relatively high rate of interest. Embrace the Household Budget Creating a budget involves allocating a set amount of money to spend on such items as housing, food, transportation, and entertainment — and to save for the future. A good first step is to keep a detailed record of all spending for at least 30 days. Every expense should be labeled, categorized, and subcategorized for tracking purposes. This may seem like a daunting task, but today’s technology could make it less tedious and possibly even fun. You can write down each expense or use computer software, online financial tools, or a mobile budgeting app. After 30 days, youmay notice that you tend to spend more than you thought on some types of items. Regardless of the budgeting method you prefer, the process can help you identify and curtail overspending. A budget doesn’t have to be overly restrictive to be effective, as long as it provides realistic spending guidelines that reflect your earnings and lifestyle. Only 44% of Americans say they have a budget and keep close track of their spending. Source: National Foundation for Credit Counseling, 2021 (most current data available)