Considering ways to manage your money better than you currently do? This is good news. While money isn’t everything, it does play a major role in your day to day life, as well as the quality of life you live. Managing your money well can make sure that you’re less likely to fall on times of hardship, as you’ll have a backup fund in case things turn wrong. It can also prevent you from falling into debt, which can be really hard to get back out of. Here are a few suggestions that you should follow to keep on top of your financial situation.
Understand Your Personal Finances
Now, this may seem like a basic one, but it’s important to understand your personal finances. So many people out there don’t actually know how much they bring in versus how much they spend each month. Instead, they’ll spend until they hit zero and wait it out until the next pay day. But this is no way to live and can see you struggle towards the end of each month. Instead, set yourself a budget and weekly limits. Consider your take-home pay, deduct your essential spending (mortgage or rent, bills, finance agreements, contracted payments) and see your disposable income. Then decide how you’d like to spend it through each month. Most people will split it equally into weeks and if they don’t spend too much in one week, it can roll over into the next week’s budget.
Only Spend What You Have Available
It’s absolutely essential that you only spend what you have available to you. Sure, there are some circumstances such as emergencies where you will have to dip into your overdraft or take out a loan or finance agreement. But on a day to day basis, for non essentials, you really do need to stick to your disposable income. Whether that’s determining how much you can spend on a holiday, weekend plans, playing thepools, or anything else, set yourself a limit and stick to it. This will take self-control and you may find that you have to miss out on certain things that you would like to do or buy. But if it’s that special, you can wait and save for it.
Putting Money Aside
While you can get by spending your disposable income, it is definitely a wise decision to put money aside in some sort of savings account. This is logical if you want to save for something in particular, such as a mortgage deposit, a car or other expensive purchase. But if you aren’t saving with a goal in mind, it’s still good to have savings anyway. You never know when you could lose work or be hit by an unexpected cost. Having savings provides you with a safety net.
As you can see, there are various steps towards improving your financial management. Those outlined above are just a few. But hopefully, you’ll start looking further into the subject now and practicing good financial behaviour!