Nowadays,
being good at the financial level is a crucial skill that you have to acquire, in
an easy –or hard- way. Even if sometimes staying at the balance seems like a
high hill to surmount, in reality it is not, even great math skills or economic
expertise aren't really necessary, you just need to know basic addition and
subtraction, and have a responsible vision.
Here
is a clear example of that: When you are faced with a payment decision, specially
a massive one, don’t just take for granted you can afford it and go for it.
Confirm firstly that you can afford it and that you haven’t already dedicated
those funds to another expense, also be sure that these funds aren’t your last
pennies; life is full of surprises and coming events that need some savings.
That
means using your budget carefully and establishing a balance in your checking
and savings accounts to choose whether you can afford the purchase or not. Keep
in mind that just because the money is here doesn't mean it must be spent.
Everyone
around you would tell you: Life is much easier when you have good financial
skills. Well it is true; how you spend your money affects your credit score and
the sum of debt you end up carrying. If you are stressed with money management,
for instance, you are in the circle of living paycheck to paycheck in spite of
making more than enough money, that is a serious problem!
Without
further do, here are some simple tips to guide your through your financial
balance:
Make a clear budget
If
you are one of those people who don’t put financial plans because they don’t
want to go through the exhausting process of listing out purchases, summing up
numbers, and being sure everything lines up, think what? You are completely wrong!
All
it takes to get your expenses on track is a few hours working on a budget each
month, why wouldn’t you do this simple task? Even if you are not convinced, instead
of focusing on the “boring” process of creating this budget, focus on the value
that budgeting will bring to your life, and the amount of money you will spare!
Keep in mind to use it!
Finally
you made the budget, hallelujah! But remember your budget is ineffective if you
have just made it then let it gather dust in a file placed away from your sight
in your bookshelf.
Keep
checking and using it throughout the month to help direct your spending choices.
Revise it as you pay bills and other expenses, at any moment during the month,
you must have a clear idea of how much money you have already spent, how much
you are able to spend, and how much you are saving, consider also any expenses you
have left to pay.
Supervise your spending
Small
expenses right and left add up quickly, even before you realize it, you have
already overspent your budget. Start tracking your spendings to find out things
where you may be unconsciously overspending.
Save
your receipts and write down your purchases in a spending journal, categorize
them so you can recognize where you have a hard time maintaining your spending
aligned.
Learn how to make savings
A crucial
part that your budget must include is the net income: the sum of money left
after you took away all your expenses from your income. If you have any money
left over, good for you! You can spend this amount for fun, you can’t go mad
with this money, particularly if it’s not a lot of it.
Develop
the sense of saving a little bit of cash every month, it is hard at the beginning
but you will get gradually used to it, and it comes handy in the future as an
old Arabic proverb says “The white penny will become useful in your dark day”
You
can deposit money into a savings account each month, which will help you erect
healthy financial habits. You can also set it up automatically (lots of banks
have this option), so the money is mechanically transferred from your checking
account to your savings account each month. thus you don’t have to remember to
make the transfer.
Loans are addictive!
Just
because your current net income qualifies you for a certain loan, it doesn’t
mean you should jump into it. Many people truthfully think the bank wouldn’t
approve them for a credit card or loan that they can’t afford, well, it doesn’t
work like that!
The bank only acknowledges your income -as you
have declared, and the debt obligations included on your credit report, that is
it! Not any other obligations that may prevent you from making your payments on
time. So it’s for you to make a decision whether a monthly payment is reasonable
based on your income and other financial obligations.
There is always a cheaper choice
Here
is another point that may save you a reasonable sum of money; you can make the
most of your money by comparison shopping, which means ensuring that you are
paying the lowest prices for any product or service.
Look
for coupons, discounts, and cheaper alternatives whenever you can, it may seem
futile and time-consuming, but in reality it can save you lots of benjis!
Say no to Credit Card!
Credit
cards are you worst enemy, and here is why: when you run out of cash, you turn
to your credit cards without even considering whether you can afford to pay the
balance, basically, you are buying things that you may not need, with the money
that you don’t have!
Resist
the urge to use your credit cards for purchases you can’t afford right now, most
of times these items you don’t really need.
At first, you may not be used to putting off
purchases until you can afford them. The more you make these habits part of
your daily life, the easier it is to manage your money, and the better off your
finances will be.
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