Having an understanding of your finances is one of the most important aspects of your life.
If you want to retire (early) you need money. Want to go on holiday? You need money. Want to go to a restaurant? You need money. And so on.
One day in the future we may live in a money-less society, but the world we live in today requires money as the form of exchange.
Being in control of your money can give you confidence and the foundations needed for building wealth. So these are three steps to take:
Get a handle on what’s happening to your money
If you don’t know what’s going on with your money then it’s like trying to reach a destination with your eyes shut – you’d have to be lucky to get to where you want to go!
The first thing you need to do see how much you’re bringing in and how much is going out of the door. I’m not saying make a budget (although you can), I’m simply saying track what’s happening so you have an understanding.
There’s plenty of ways you can track your expenses. You could put them into a Google or Excel spreadsheet. You could use your bank’s ability to classify transactions, I use Commonwealth Bank of Australia’s (ASX: CBA). Or you could use an app such as Zip Co Ltd’s (ASX: Z1P) Pocketbook.
Track your wealth
One of the best ways to be motivated with your money is to track your progress. Perhaps once a month you could look to see how much your wealth has changed.
If you look at your bank accounts, your debts and your super you will be able to watch your position improve as the months go buy, proving that what you’re doing is working.
Excel, Google spreadsheets or free wealth trackers could be good options for doing the tracking.
Make sure you keep your first calculated wealth numbers so you can see how much progress you’ve made since the beginning as time goes on.
Start researching investment options
Once your personal finances are sorted you can think about putting your cash to work in investment options to grow your wealth at a faster pace for the future.
I firmly believe that shares are the best way to go. But for starters you may want to go for a solid option that could provide capital growth and dividend growth.
You may also have a focus on dividends to contribute to your life’s current expenses and experiences. If so, these top ASX shares could be just what you’re looking for.
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Tristan Harrison owns shares of FUTURE GEN FPO and Magellan Flagship Fund Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.