Although finance is taught in schools, the importance and practicality of money still lack in education curriculums worldwide. How then are we supposed to learn how to deal with our own finances? Experts claim that people’s relationship with money is dependant on their behaviour and how they think the world works. Experiences such as inflation (when prices rise), recession (decline in economic activity) and wars among others greatly affect how people behave with their money. While we cannot control where and when we are born, we can control how we manage our finances to set ourselves up for success. Budgeting and investing are not as scary as they sound, manage your money in these simple steps;
Study your spending habits to manage your money better
You first need to understand what you spend money on to know how to manage your money. The little expenses we think do not mean anything actually add up to a sizeable amount when combined. You could take a week or two to study how exactly you spend your money and identify loopholes stealing your money. This will help you know what needs to change. Apps such as Money Manager can come in handy to avoid writing down and calculating manually.
Create Financial Goals to manage your money better
After studying your spending habits, you will identify what needs to change and this will help you create financial goals. Financial goals are the backbone of all your other goals and so it is vital for them to be clear and precise. Goals can include paying off debt or decreasing your spending to save for a desired vacation or mortgage. See this helpful guide to create financial goals.
Create an Action Plan to manage your money better
Goals are cute but actually accomplishing them is even cuter. Create a plan of how you will realize your goals to make sure you actually follow through with them. For instance, you can plan to forego your daily cup of coffee or weekly eating out and save the money to pay off your debts.
Budget your Money
A budget is one of the keys to managing your money better. Allocating certain percentages of your income to your needs and wants will help you achieve your goals. A popular budgeting rule is the 50 30 20 rule which involves dividing your income into 3 parts, 50% on needs, 30% on wants and 20% on savings. It is important to have a clear distinction of what your needs and wants are for this to work. Put your Ms Excel skills into practice and budget your money using spreadsheets. See these budgeting hacks you need to know about.
Learn about Investing
Whether we know or do not know anything about investing, the truth is that we still practice it to some degree. For instance, eating out 4 days a week is an investment in eating out. However, what makes this a poor investment is that it has minimum to no returns. What you invest your time and money in essentially controls you. Learn to put your time and money into things that will actually bring value to you. But whatever you do, know that you are your biggest investment. Take time to study and learn new things that will level you up. On this blog, you will find several posts that will help you navigate life.
Avoid Impromtu Mall visits
Out of sight, out of mind. Avoid unplanned mall visits since they are the thieves of all your money. Supermarkets and grocery outlets are strategically set up to show you what you desire first and what you need towards the end of their stores, which makes us impulse buy. Always write down a list of things you need and store it in your phone so that you buy what you need when you plan to visit a mall. Alternatively, you can order your monthly shopping online and have it delivered to you to avoid the temptation in supermarkets.
Revise your Financial Goals regularly
Just like the rest of your goals, it is important to audit your financial goals in order to determine what is working and what is not. You may become ambitious while setting these goals the first time but after a month, discover your action plan did not really work. Other than giving up, return to the drawing board and approach your goals differently. Additionally, your goals and plans over time may change due to changing personal circumstances like having a baby or marriage.
The important thing is to start, keep at it and learn from your mistakes. Subscribe to my mailing list for my monthly money budgeter coming out this month and for other tips and tricks. What is your biggest struggle when it comes to your personal finances? Let me know in the comments below.
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