Budgeting
Top 5 Tips for Managing your Personal Finances
Sooner or later, most people reach a point when they recognise they must gain control over their finances. The good news is that once an individual decides to organise their personal finances, the rewards for doing so — less stress, more money for unexpected expenses and increased peace of mind, are well worth the effort it took to examine one’s financial habits.
The following top 5 tips for managing personal finances address areas that are essential for almost everyone’s personal financial success.
Determine where your money is going – For one month, write down every purchase you make. At the end of the month, you will have a good idea as to where your money is currently flowing.
1 – Make out a new budget – Now that you know where your money went, you can decide where it should go in the future. Budget for essentials, like food, housing, utilities and transportation. Don’t worry about not having any money left over for savings yet. You didn’t get into a financial troubles overnight and it will take some time to turn your finances around to the point where you can save on a regular basis.
2 – Examine your debt – Review all your monthly expenses and see if there are ways you can reduce the amount of interest you pay. Refinance your credit cards and loans, shop around for better car insurance rates or switch your expensive phone bill to a prepaid plan. Often people can save hundreds of dollars every month just by trimming the fat off their expenses. Make your monthly expenses lean and mean.
3 – Vow you will not incur charges to your credit card unless you can pay off the balance every month – If you are paying interest on credit card debt, you need to temporarily stop using them and focus on paying off the balances. Once you reach a point when they are paid in full every month, many cards offer reward points and bonuses that essentially pay YOU to use their card.
4 – Set long-term goals – Once you have your spending and debt under control, then you can start saving for long-term goals. Set aside an amount every month for retirement and for unexpected expenses that invariably crop up. If saving is difficult with your current level of income, then take on a part-time job or look for ways you can advance in your current position or keep trimming the fat from your budget. Creating a nest egg is essential for your future and is one of the key components of financial freedom.
While you are working to get your finances in order, chances are you will encounter an emergency here or there. Don’t be too hard on yourself if you need to take out a short-term cash loan. Before you know it, you will have it paid off and will be back on track to meet your objectives. For more information on how to achieve all your financial goals, please contact us.
Click here if you would like to learn how to set effective goals to avoid personal loan debt.
