Start small, grow exponentially. Here’s how.
While it may seem on the outside like money management is only for the financially savvy, most people will come to realize throughout their lives that keeping a close eye on where their money goes and adapting on the fly to expenses and payments is a life necessity. Sure, you could start a PhD in finances, but really, who has the time for that? It doesn't take as much effort to manage your money if you are prepared for anything beforehand. So how would you go about doing that? Let's find out.
If you ask anyone with any credibility what the foremost piece of advice they can give, they will probably lead you towards a budget. We get it, it isn't exactly the most glamorous aspect of building your wealth, but it will definitely go a long way in making sure you don't overspend what you don't have, and it'll keep on track of your financial goals and maybe even your bigger aspirations. So if you ever find yourself unable to start tackling a budget, keep in mind:
Please don't focus on the aspect of creating a budget itself. Instead, think about the things it will inevitably bring to your life.
For a little more concrete direction as to where to start budgeting, the essential things it will bring to your day to day life is:
Insight as to where your money goes.
Your credit rating will start rising as a result of your money discipline.
Unexpected costs aren’t going to put you in a load of debt.
Any financial goals on the horizon will be that much closer – be it a new car, a house, or even a large food order.
The next logical step in fixing up your finances is tracking where your money is going. It's a good idea to keep a diary with you where you can jot down all the little expenses that accumulate throughout the month, and then at the end of the month – review them and be on the lookout.
Online subscriptions that you no longer use
or even some consistent splurging with food deliver apps
These are all things that seem pretty small on the surface but quickly add up to significant amounts when you take a stepback and look at it every month. By cutting down on the small, inconsequential expenses, you'll soon come to realize that you have much more money sitting inyour bank account, somewhat akin to even a raise!
For many, where money becomes a significant downfall is when an emergency drains the bank account empty. These are almost always nobody's fault in actuality but being prepared will go a long way in helping you sleep soundly at night. Now, don't get us wrong, this doesn't happen in an instant, so saving up for a rainy day should ideally become a habit that you cultivate over time. However, it is improbable that you'll have constant emergencies, so setting yourself up to tackle these problems head becomes ever more critical. An emergency fund doesn't have to be one taken out of your salary on a large scale so:
Putting a little on the side (we recommend 10-15% of your income) will save yourself many future headaches.
This one is a fun one for sure. While were commend that you keep a certain degree of discipline when you save money, we don't mean that you should strangle yourself financially where you can't have any fun. That's why we highly recommend that after you subtract your essential expenses from your net income, use some of that money on yourself. Games? Movies? Maybe a personal deep dish pizza? Don't get us wrong. We don't mean that you should go and bust everything you have leftover, as you'll need it to sustain the month's length, but:
Try and keep some money to spend on something you want, whether it's productive or not.
Everything we suggested thus far is by no means hard and fast rules. Instead, these should be used as a baseline to augment your current financial habits (and maybe remove the unnecessary ones).And don't worry if you don't get your desired outcome right out the gate – you still have some time to shape it up to your liking before the world opens up again to go out exploring!
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