- Personal Finance
The One Thing You Can Do For Free That Will Boost Your Wealth - Guaranteed!
With the whole world experiencing the effects of the economic downturn, and little hope that a huge upturn will come soon, the best thing you can do for yourself is to learn to manage your personal finances. This article will provide an informative and practical overview of the ways to manage your money so that you can get out of debt, stay away from debt, and build a secure financial future for yourself and your family.
The most important thing you need to remember when managing your money is that spending what you don’t have on things you don’t need is the absolute quickest way to financial ruin. For example, buying a pair of shoes or a new gadget on a credit card when you have absolutely no idea of how you are going to pay it off is how you’ll get into debt. Indeed, once you’re into debt, it takes a change of habits and mindset to get out of it.
Now, for example, if you put the money you would have otherwise spent on the things you didn’t really need, but just wanted, then the money would still be yours. In my view, this is another crucial thing to do if you want to manage your money properly – don’t buy what you can’t afford. Even if you can afford it, think twice. Rich people don’t get rich by spending their money
But what if you really want it? That new smartphone is so shiny and new, right? It will surely impress your friends and colleagues if you get it first.
Well, that is the choice you have to make yourself. Do you want temporary joy, or long lasting security? Do you want that thing now, or have something much better in the future?
Before we get into the practical plan, re-read the above paragraphs. It is very important to live within your means, as this is the number one principle of managing your money. Spending carelessly is poor money management. Saving your money, and investing it into a savings account, is wise.
So, the main practical step you can take is as follows.
Make a budget and stick to it!
If you find yourself wondering where your money goes month after month, and are spending almost all of your income on your family, the best thing to do is create a budget and stick to it. Many banks and various pieces of software can help you create a budget, and while some paid-for versions have some really great features – e.g. Quicken – free budget planners are perfect for when you are first starting out. Set a limit for what you spend on each category of purchases, and make sure you set at least 10% of your income to go into a savings account (preferably an online savings account so that you can manage it from the comfort of your own home). An excel spreadsheet can also be a great money managing tool, so just search for ‘Excel Budget Spreadsheet’ to find some.
Set your rent/mortgage and bills first (such as gas/electric, internet, and so on), so you know what you need to live. Afterwards add food and travel expenses. Then, add your savings goal. After all this is done, you can then add your non-essential purchases, like entertainment purchases, clothes shopping, and eating out. Don’t be too stringent, as of course you will still want to enjoy yourself – just estimate what you spend each money and cut it down by 10 or 20%.
Once this is all set up, track what you spend. Make a conscious effort to stick to your budget, and don’t go over your limit. If you’ve spent your monthly limit on clothes, then tough! The shoes you want will have to wait until next month. Don’t worry about them going – shops rarely take things off of sale for good, as they want your money!
Also, remember not to spend your savings until you reach your goal of what you want to save! Even then, if you spend your savings, the money is not savings anymore!
You’ll find that managing your finances is not as easy as it may seem when you’re first starting out, but it’s certainly not hard. You just have to pay attention to your spending and make a real effort to stick to your budget. That is managing your money wisely, and your savings account and future will thank you generously for it.