As tempting it might be to give into careless spending and impulsive buying, one has to understand that living from one paycheck to another isn’t providing us with firmly grounded future. And it doesn’t take a financial genius to tell you that. You already know it yourself. All that remains is that you “auto-correct” yourself in order to keep your finance in order. You can do that by following some simple tips.
Know thy pocket
You know that exhilarating feeling when you find some forgotten cash in the pocket of your old pants? Though this is a pleasant surprise, when it comes to managing your finances, it would be better if it could be a surprise free area. First thing you should always keep in mind is the most unpleasant, the debts. Have a diary where you’ll write down all of it. That means credit card debts, loans and other types of debts. A bi weekly mortgage calculator, may be of great help with that. Also, it’s important to know just how much money are you spending on a regular basis per month. Make a spending journal, or an overall personal finance diary. Categorize your all yours spending. Arrange it in groups like: rent, car payments, groceries, etc.
Look into distance
When considering your financial condition, it’s crucial that you have a long time perspective. You should take in deep consideration your current whereabouts and where do you want to be in five or ten years from now. Developing an attitude based on those considerations will help you to improve your financial habits, and also to evolve money management skills. A part of all you earn should be “a keeper” for the future necessities. Start with this routine as early as you can, and save your money consistently. By putting some money from every paycheck “on the side”, you’ll already secure your wellbeing for years to come.
Making and breaking habits
The most important step towards an efficient savings is to create healthy habits in view of personal finance. In order to do that, first you have to break all of your sloppy and careless old habits. Make a difference between “I need” and “I want”. That doesn’t necessarily means you never get to buy something you desire, but it is a warning to shop wisely. Set a firm goal of getting “out of debts” in five years from now, and then in another five to achieve financial independence and in some years to save 20 to 30 percent of your paycheck, so you can make smart investment that would help your savings to grow exponentially.
For rainy days
We all know that, even despite of all our efforts, it happens that some unexpected outgoings come up, and pull us to financial rock bottom. To avoid those little money consuming pests to empty your piggy-bank completely, prevent them by having an emergency fund. No matter how much you owe, you must have some amount of money in your budget for possible rainy days. And if those rainy days turn out to be just passing clouds, this money will come in handy as an additional savings, and also this will contribute your newly acquired habit of regularly putting money on the side.
If you start this plan today, you might feel its effects soon enough, and in some time you’ll be able to celebrate your budget growth.