Even though it is not taught in school, managing one’s personal finances is something everyone has to do as adults. By keeping your finances in order, you’ll eliminate a lot of stress that would otherwise be a daily part of your life. Here are five helpful strategies you can employ to manage your personal finances.
Make a Budget
If you want to successfully manage your finances, your first order of business should be making a budget. For about one month, you should make a record of all your expenses without limiting yourself. Once the month is over, organize your expenses in any way you wish and compare it to your monthly earnings. Some people find it easier to track their finances when using personalized checks.
Now that you have a good idea of what you spend your money on, create a budget. If possible, allocate some of your earnings to savings.
Be Smart with Your Money
Chances are, you have many things around the house that you’ve only used once and never used again. Some examples of such items are DVDs, CDs, books, magazines, and more. Whenever possible, rent or borrow instead of buying. For example, if you know you’re only going to read a book once, borrow it from the library instead.
However, don’t rent everything. Typically, it’s simply best to purchase something if you’re going to use it a lot or for a long time.
Only Spend Money You Have
Unless it is a complete emergency, only spend money that you actually have. Many people who are debt spend money that they expect to earn eventually. However, when it comes to money, it’s best to keep the adage, “Don’t count your chickens until they hatch” in mind.
Build Your Savings
Believe it or not, it’s never too early to start saving. Even if you have a small income, you should attempt to save at least 10 percent of it. If that seems difficult, start small and slowly increase the amount you save by constantly tweaking your budget. For example, you may start at five percent of your income going to savings and eventually increasing it to 10 percent after a raise.
Once you’ve got some savings accumulated, you should start investing. However, before you invest thousands of dollars, you should familiarize yourself with the many options out there. Choose investment options that are good for beginners, such as gold, the stock market, and 401k, before moving on to riskier investment options.
If you’re not experienced, managing one’s personal finances can be difficult, but definitely not impossible. As long as utilize the five helpful strategies listed above, you’ll be financially secure in no time.