Nobody wants to mess around with their finances because we all know what happens if we do. Yet, it is so difficult to keep track, and you are just unable to manage your money even if you are only buying what is necessary. But that is what you automatically think when you do not keep track of your finances. But do not worry, this is a problem everyone faces, and though it makes your life a mess, the solution to this is pretty easy.
There are myriad benefits to efficiently handling your finances. You can spot where you have been going wrong, and you can take control of what you buy, you can fulfill your wishes you failed to do earlier and, most importantly, you feel satisfied and happy with what you are earning. Hereunder are the points which act as a comprehensive guide to managing money and, if you follow them consistently, you will see a tremendous change in your lifestyle just because down the line, you will automatically be handling your finances efficiently.
- Knowing your Budget
To know your budget, you will have to create it. There is no way otherwise. So, sit down, pick up a pen and a paper and write your salary on it. Then, cut the regular taxes out of it. Once that is done, you must write down the regular necessities of your life, which you cannot go without. Only then, you must write in bullet points everything you spend in and how much you spend on those things. To get an idea, you can look at a few receipts from the last few months. Are you wondering what benefit you would get in doing that? This will enable you to see the mistakes you have been making without finding an excuse for them. The real benefit starts to come in when you organize and manage your budget. Knowing your budget is groundwork without which you cannot possibly organize your budget. In fact, one of the reasons you were never able to craft a plan to handle your finances is that you never confronted it. Now is the time to do that if you want a change.
- Organizing and Managing your Budget
Once you have on paper what you need and what you buy, you will know where to cut your expenses. You neither need to stop at Starbucks every day, nor do you want a subscription for a hundred apps you do not need. So, invest in a coffee maker instead that gives you a chance to make your coffee with fewer calories and less money. Also, only keep the apps you desperately need and try to find a free alternative for the apps you pay for just because you like to have them. There could be other unnecessary things you might be spending in; these are just some general examples. Then, write how much you need to spend on groceries, your everyday food, your car, your house, etc. Once the list is down, you will realize how careless you have been with money. The total you will come up to get the necessities will definitely be a lot less than what you are earning. Now, let’s start some savings!
- Planning Ahead of Retirement
If you are about to retire and scared how that would affect your life, do not be. It is understandable how much anxiety retirement can bring. All you need to do is start saving some money specifically for retirement. Also, already make a small plan on how you will spend your pension efficiently so that you can maintain your lifestyle as it is. However, if the worry does not leave you, you can get some free advice from the financial advisors from pensionadvisors.co.uk. The main plan with retirement coming up is not to worry much because that is not going to help. What is going to help is that you ask for it. On the other hand, if you are young and not too close to retirement, save a little amount under the ‘post-retirement’ tag and DO NOT use it for any other purposes.
- Handling the Debt
Now that you have created a budget plan and already started saving a little for retirement, you must manage your debt. If it is a small debt that you have been delaying for no reason, now is the time to get it over with before it gets too big to handle. Then, set a small portion of your money to pay for your credit cards, mortgages, or any loans that you have. Also, do not take a loan anymore unless necessary. For example, opting for a new year every couple of years is not a necessity. Also, start paying off with the loan, which has the most interest in it.
- Setting a Goal to Save
Now is the time to have a proper goal to save some money. Among the many ways to save money, the easier trick is to have a mini and a BIG goal. You need to save a little each month to fulfill your little wishes, like eating dinner at your favorite restaurant or getting your favorite shoes you wanted to get. Then, you need to save a little more for bigger things like a house or a car or a vacation. Keep that money completely aside and forget about it. Make a clear distinction between these two kinds of savings, so you do not end up compromising the big saving goal for the mini one.
- Emergency Fund
You never know when you could fall sick or get into some kind of accident, or maybe your family faces some kind of crisis and looks up to you for some financial aid. You need to have some money saved up for any kind of emergency, so you do not end up ruining your management of finances. Even saving a little for the times of crisis can add up to a lot and save you from financial distress.
Spending unnecessarily on wherever you want to will always lead to anxiety by the end of the month. The wise way is to plan your budget and sticking to it. Also, you must enjoy the process of sacrificing little wishes for a bigger gain. You will notice that your lifestyle would improve once you stop buying stuff on impulse, once you can pass McDonald’s without a craving for it. So, follow the ways above to handle your finances and lead a happier and financially secure life.
Ethan Lark is a Business, Finance, and Technology blogger who spends his entire day writing quality blogs. He is a passionate reader and loves to share quality content prevalent on the web with his friends and followers and keeping a keen eye on latest trends and news in those industries