If there is one thing that most people worry about, constantly, it is money. It doesn’t matter how much you make, or what you do for a living; finances are always a concern for the majority of the working-class heroes.
While it often may seem like an impossible dream, there is a way to navigate the murky waters of finances and money, though it does require some discipline. Here is how you can manage your finances like a pro.
Track Your Spending
You can’t possibly hope to make ends meet and figure your finances out without knowing where your money goes first. A lot of people try to manage their finances randomly, without considering their spending habits before anything else, which is a huge mistake. So, make a list of the things you buy every month, and divide it into essentials and non-essentials. While you may think this is a cumbersome task, it is quite an important one nonetheless, for a very simple reason: it will put you face to face with your spending habits, which probably need to change.
You already know that you have half a dozen different subscription services, half of which you don’t even use, not to mention the trips to the mall and the shopping receipts. But seeing those expenditures written before you change everything. You’re faced with the fact that you spend a lot of money, more often than not, on things you don’t really need, which is the first step towards changing those unhealthy habits.
While a good old fashioned piece of paper never hurt anybody, you need to be practical about managing your finances. Fortunately, technology has made it much easier to do so, and you can find a lot of different ways to properly budget your earnings versus expenditures.
One way of saving money is by using budgeting software. Such applications make it easier for you to keep track of every dime you earn, and more importantly spend. You will also have access to your budget anywhere you go since you can download the app on your phone. So, if one month you fancy pampering yourself and buying something nice for you or your loved ones, all you’ll need to do is check the app to see if your budget allows it.
Create an Emergency Fund
One practice that all financial gurus follow is having an emergency fund. It may seem like a luxury, but down the line, it proves more important than you could possibly think. Bad things happen, and you could all of a sudden find yourself without a job or faced with a massive medical bill due to an unexpected illness. If you don’t have an emergency fund in such situations, you will end up borrowing money, and the whole debt cycle will start all over.
Set Financial Goals
Budgeting aside, you need to have financial goals for the future, and you should always write them down. You will have debts, more often than not, between mortgages and car installments, which is fine. The trick is in managing those debts in a way that would keep your credit score healthy and help you avoid any complications. So, set a goal like paying your call installments within two years, for example; by doing so, it becomes a priority, and everything else can wait until that financial goal is achieved. After that, you set another, and eventually, you will be able to achieve most, if not all of them.
Proper finance management is about thinking ahead. You may be in a good place now, but you still need to think of the years to come. This means starting a retirement fund, for starters, so you can live care-free when it comes to money after you retire –– which is something you deserve after a lifetime of hard work.
You might also want to consider life insurance, which is not an unnecessary cost as many would think. Life insurance not only covers your family financially in case something bad happens to you, but it also acts as a fund that you can access for money in case of emergencies after a certain period has passed.
At the end of the day, everybody wants to stop worrying about money, and most do know what they have to do for that to happen. It all comes down to who is willing to make the sacrifice and commit themselves to be debt-free, which is quite easily doable with some proper finance management. The question is, do you want it bad enough to sacrifice some things and discipline yourself when it comes to spending money and tracking your expenditures?
Interesting Related Article: “How Your Own Personal Spending Habits Can Affect Your Business Spending“