5 mins read
Ever had those times where you just find that your finances are not managed effectively? Then you feel managing your income and monthly bills (or even pocket money if you’re not working yet) is so hard, where you just keep on spending.
Here are 5 effective ways which have been collated during a survey and been advised professionally on how to manage your finances better.
This is as basic as it gets and through budgeting, you set expenditure barriers and limits, which you can physically see on your budget spreadsheet. That spreadsheet need not be complex to read, as it just needs to be realistic and easy for you to understand.
A simple budget planner would probably look something like this:
|Month: February 2019 Income: $4000|
|2||Family and Friends (social activities)||$200|
|3||Travel (Public Transport, Car)||$500|
|5||Savings (Emergency Fund)||$1700|
The above budget planner is very basic, however sophisticated you would like this table to become, you have to agree that if you’re not sticking to your budget, then your effort of creating a such a comprehensible table is futile.
2. Tracking Your Expenses
This is the part where most give up because there are two ways to going about this. First, you would have to track your expenditure every day by keying it into your spreadsheet. Second, you accumulate the expenditure records in a diary and key it in into your spreadsheet every week, however the tendency to lose a few records is possible. Both are tedious methods and that is why most give up during this stage.
However, the benefits you will receive from have such a regime outweighs the effort that is put in as you can have a clear picture of where your money is going. By having such a regime, you are also putting your mind on a constant mode of prudence with your money as you can make more conscious decisions on spending.
3. Clear off high interest loans at the onset
It is common sense to clear off high interest loans such as credit cards as soon as you can, however, most people takes it for granted by shoving it under the carpet and at 24% per annum, it is an interest rate that could make any loan shark jealous.
To achieve financial freedom, one has to debt free and the first step to this is to simply clear your credit card debt as soon as you can; we can’t emphasize on this enough.
4. Have a Savings Goal
Developing a savings goal can be a key to your financial woes. If you owe thousands to the credit company, don’t be afraid to acknowledge it, take it by the horns and clear it a step at a time. You will be surprised that with a savings goal, your perspective on money can change and you will have a clearer picture of where you are heading to financially.
An example of a goal plan can be setting up a short term savings fund which can keep you going in the event if you lose your job or require funds in the midst of a job switch. A fund like this can be about 3-6 months your monthly income.
After establishing that, you could look at other things to save for such as:
- Planning for a child
- Child’s Education
- Retirement Nest Egg
5. Write Them Down
This last point is perhaps the most important of them all. There is a reason and science to this. There are many studies that show that writing down goals increases the chances of achieving them as compared to those who did not write. Why? Because you are guided and are more focus.
Write down your budgeting and expenditures and bills will be easier to clear. Have a savings goal and you know at the end of the day, how much exactly have you saved.
As tedious as it sounds, money management is not everyone’s cup of tea but still essential for a better way of life and with these 5 steps, this is a systematic path of financial freedom and a lot less worries in life.
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