Money management is a touchy subject to discuss, as most people can’t account for their spending or earning habits properly. Not everyone fully understands that personal finance management helps to create wealth. Therefore, in this article, I will discuss tips on managing money effectively.
1. Always have a budget:
The first step to proper personal finance management is creating a budget using a scale of preference i.e. a list of the items you need to purchase or debts you need to pay off in order of importance. Creating a budget might seem a little hard, but it helps with keeping track of income and expenses and this is very important to managing funds effectively.
2. Keep track of your expenses:
Expenses refer to the costs spent on items or services. Many people can’t recount how much they spend monthly. Tracking expenses are as easy as; keeping receipts of items bought, going through bank statements and adding up all your credit. This helps to know how to manage your expenses and tracking financial health
3. Keep track of your income:
Total monthly expenses subtracted from total monthly income. If you end up with a negative value, this means you are spending more than you make. Reduce your spending habits until it leaves you with a total value of zero.
If you end up with a positive value, you are right on track and you are spending less than you make. You can then increase your savings or pay off outstanding debts. Having a clear understanding of your expenses and income is a significant step to managing your money right.
4. Pay off your debts:
Pay off debts with high interest rates first. Keep up with the required payments. Also, commit to paying off your mortgage as soon as you can.
5. Save for emergencies:
Be prepared, just as the boys’ scout motto says. It’s ideal to prepare some money for emergency occurrences. You shouldn’t touch or spend out of your emergency fund. Emergency funds serve a good purpose if you lose your job, your roof leaks, or your car breaks down. I once heard from a financial expert that our emergency funds should at least be able to cover our 6 months expense.
Save and Invest
Cultivate the habit of putting away a certain amount of money daily, weekly, or monthly. Have a savings target because this usually helps you work towards your goals. And when you hit your savings target?
Invest. There’s no other way to multiply your money than to invest in properties, invest in the capital market, and invest yourself.
Knowing and cultivating these habits will not only help you manage your money, it will improve your life.
Would you like a free 30 mins call with me?
I hope you have learned one or two things from this piece. Last, I mentor people to help them create wealth and become financially independent through investing in properties, and the capital market (Forex trading).
Would you like to get a free 30 mins to get on a call with me to discuss ways to attain financial independence?
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