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Melissa is a mother of 2, lives in Utah, and writes for a multitude of sites. She is currently the EIC of HarcourtHealth.com and writes about health, wellness, and business topics.

Managing your finances can be a very personal and difficult task. Some people spend compulsively on more than they can afford, and others save every penny but never get themselves basic necessities. The key to money management is to start paying attention to where your money goes, especially if you have a low income.

Loans

Credit is a staple in a healthy economy. Credit enables you to borrow money, which you promise to return in the future, plus interest. Loans give you the capability to buy something expensive, like a house or a car, when you don’t necessarily have the money in full right away. Loans make it possible for you to have the freedom to obtain the spending priorities in your life. But before you apply for a loan, you should consider exactly what those priorities are. This is different for each individual. For some, buying a house is an important part of what they envision for their life. If you’re cash-strapped, however, maybe you need financial assistance to buy this month’s groceries. This is a good reason to look into a loan that will give you the money you need quickly, like payday loans in Canada. This type of loan requires a simple, five-minute application process. Once approved, your loan will be directly deposited into your bank account, ready for use. This type of loan is best for individuals who know they have some money on the way but are unable to pay the bills right now.

Spending

If you find you are taking out loan after loan without the promise of more income in your future, you might want to reconsider your spending habits. List your spending priorities in order of importance. What do you think is worth your money? Planning for the long-term can help you reach the spending goals you set for yourself. It can be easy to spend day-to-day on what you think you need right now. But if you gather your credit card statements, receipts, and spending log, you can actually categorize what you’re spending on the most. The answer might surprise you. Maybe you’re spending more money eating out than going to the grocery store. Or perhaps transportation costs exceed what you expected. With this knowledge, you will be able to cut out the superfluous and maximize your disposable income (aka the money you have to spend right now).

Saving

Once you cut your spending costs, you should start to see a pile of money growing in size over time. Use this savings to pay off any outstanding loan debts you may have. Once you are debt-free, you can put this money in a savings account with a good annual percentage yield (APY). If you don’t already have a savings account, look into options that have a high APY and no hidden fees. You want to make sure all of your money is earning interest, not being drained for costs you didn’t know about. A savings account is a good short-term place to keep your money where it won’t decline in value due to evergrowing inflation. You will have ready access to your money when you need it, but try to maintain your new spending habits and keep your cost of living to a minimum. Soon, you will see your money growing in value, and you will have a little bit of wiggle room that you didn’t have before.

Investments

After your savings builds, you have paid any outstanding debt, and you are receiving a steady source of income, you can consider investing. Investing your money can enhance its growth potential beyond what a savings account can achieve. Investments range from retirement accounts, to stocks and bonds, to supporting small businesses. To find what investments fit your budget, you need to consider how soon you will want to spend the money and how risky of an investment you are willing to take. If you have money set aside to buy a new home in a few years, it’s best to invest with low-risk in case the market fluctuates quickly and you lose all of your investment. These low-risk investments include bonds, money market funds, or simply keeping your money in that savings account. Money set aside for retirement can afford a riskier investment, especially if you are fairly young. Over a number of years, your investment can withstand a few market spikes and plummets. These higher-risk investments include stocks and small businesses. Listen to the advice of those with a good track record in investment. You may even want to consider investing in something that will have long-term financial returns as well as a positive social and environmental impact. Sustainable investment funds like the VFTSX offered by Vanguard could be . This way, you can feel good about the money you have worked hard to invest and foster a positive change. Eventually, you may have a big return on the money you invested, culminating in more financial freedom for your future. There is always risk when investing, but if you take the proper precautions, your rewards outweigh the risks.

All in all, handling money can be tricky. But if you want to have the freedom to spend, you need to dive in deep and assess your financial situation. Luckily, now you have the tools to begin!