Everybody has to start somewhere when it comes to their finances and the best places is often at home. After all, if you don’t have your personal situation under control you may be setting yourself up for professional failure if you operate a business or have plans to in the future.
Here we are going to look at some of the basics to ensure you make the most out of the money you have available and you manage your finances effectively so you can look forward to the future.
Track Every Expense
Understanding your expenses is always the first step in taking control of your financial situation. If you don’t know where your money goes, you won’t understand the adjustments you can make to manage your cash flow more effectively.
The best way to go about doing this is to create a spreadsheet where you track every expenditure you have for the month. This should include everything from mortgage payments and bills through to meals and everything else you spent money on. From there you should split these up so you have a list of your essential expenditures and how much that takes out of your monthly income. Use this as the basis for all other financial decisions and remember that business expenses may be includable in your end-of-year taxes.
The best time to start saving is always right now. Don’t make the mistake of thinking that you should put it off until your peak earning years, as this could result in you missing out on interest on what little you could put away now.
The key here is to not think about saving huge amounts of money straight off the bat. If it makes you feel more comfortable just start putting a little away each month. It won’t be long before you start building a little nest egg.
What do you actually want to do with your money? If you can’t answer that question than you may not be as prepared to manage your personal finances as you think you are.
Having a goal in place for your income allows you to stay motivated and focused on whatever it is you want to achieve. The goal could be whatever you want it to be, such as having enough money to put down a deposit on a house or saving for a family vacation. Decide on the goal and write it down, then create a plan of action that will help you achieve it.
Pay By Cash, Not Plastic
While debit cards, chip and pin and contactless payment systems have all made the act of paying for goods and services quicker and more convenient, this ease of use could become your enemy if you are struggling to manage your money.
The act of paying by card means you get no tangible feeling of money changing hands, which can lead to you underestimating the true cost of your purchases. A good technique is to draw out the money that you need for the purchase so you can leave the cards at home. This also cuts down on impulse purchases.
Stay On Top Of Bills
Your bills should always be considered priority expenditures. If you don’t pay them on time you may get into legal trouble, plus you will find that your credit rating starts to fall, which could result in problems later on down the line.
Perhaps as important as this is the issue of interest. The longer your bills go unpaid the more interest they accrue. This is basically going to be money spent that does nothing for you, so make higher or more regular payments if you are able, so you can get your bills out of the way.
Consider Professional Help
If you are still struggling to plan, consider acquiring the services of a financial consultant or adviser. These people are experts in the field and will be able to take the information you give them and create a plan of action for you to follow.
The advice you receive from professionals may require a little bit of investment, but you will usually find that they help you manage your money effectively enough for you to save more than you spend on their services.
If you would like to find out any more about the topics covered in this article, please don’t hesitate to contact me at [email protected], or use the contact forms on the site to get in touch.