Are you having any trouble with managing your personal finance? We know. We have all encountered it at least once in our lives. Some of us did blame ourselves for not having a high-paying job, while others considered their ruthless spending to be responsible.
Well, let’s be honest; both of these reasons are viable in one way or another. However, if you can manage your cash flow better, nothing will pose a problem for you.
But, how will you manage your personal finance without selling your IPO stock or personal belongings?
Sometimes, it can take many years to reach a preferred financial goal. But it is part of the process. In this article, we will share a few tips that may help you accordingly.
So, relax your shoulders, take a deep breath, and let’s begin our journey!
1. Create A Long-Term And A Short-Term Goal
Building your broken financial castle from scratch will be an eternal act of juggling. Sometimes, you will be able to accumulate a decent amount of money without any issue. However, you may also lose everything in one go if a sudden disaster strikes you.
So, you must start your financial planning by creating a long-term and a short-term goal. Of course, the possibilities of the same will depend on your overall offline or online earning stability. But you have to start from somewhere.
Considerations To Make
- For a long-term goal, we would suggest you start saving around 10% of your overall gross salary every year. You must continue this method until your retirement.
- Your short-term goal should include creating an emergency fund that will help you cover three months of expenses. You can try to pay off the existing balances of your credit card to save some money immediately.
2. Curate A Proper Budget Plan
Creating a budget plan is almost like forming a routine in your daily life. Yes, we understand – it’s boring. But it will play a significant role in accomplishing your long-term financial target, both for your personal gains and improving your company’s capital stock.
The actual purpose of a budget is to keep everything in front of you so that you can check where your investment is going.
Considerations To Make
- The best way to analyse your budget in 50/30/20 framework. You must use only 50% of your income on essential aspects (food, mortgage, etc.) in this approach. The other 30% should be spent on your streaming plans or other minor expenses. And, you will need to save the final 20% of the money.
- Besides the previous method, you can also follow the 60% solution. It works in almost the same way as the 50/30/20 framework. But you will need to save at least 25% of your income here.
3. Try Getting Rid Of Your Credit Card Debt
The interest rate of a credit card might seem like nothing at first. However, if you let it pile up over time, it will gravely affect your budget. So, if you are following the 50/30/20 framework, try to pay off your credit card bill within that 50%.
Considerations To Make
- Enlist your credit card debts from the highest interest percentage to the lowest one. Make minimum payments on most of them, but keep a larger sum of money for the highest-interest one.
- You can minimize your credit card debt by keeping your spending habit under control. Only try to use the card for paying for restaurants or other entertainment purposes. Otherwise, take care of the basic necessities, like rent or utilities, with your budget account.
4. Avoid Spending On Recurring Charges
Do you have the habit of subscribing to some services that you are never going to use? We all love to see streaming services like Netflix or Amazon Prime and, therefore, buy their subscription.
However, sometimes, even if we are not watching any shows, we forget about unsubscribing.
Whether you believe it or not, this is a pretty common way of unintentionally spending one’s money entirely. So, try to review these unnecessary subscriptions and cut them off if you are not using them anyway.
5. Save Up Before Splashing Big
Most of us tend to buy things on an impulse or without thinking much about it. However, it’s wrong, and if you keep doing the same, it can negatively influence your money-saving strategies.
Debts or loans might be helpful in some aspects. But we would ask you to avoid them, as they can affect your future budget planning!
So, what should you do if you want to splash your cash to buy something you love? It’d be better for you to start saving your money for it first. Note it as a short-term goal in your notebook of budget planning and try to achieve it slowly but gradually.
6. Ask For Expert Advice
Once you have saved a little, you can try talking with an expert or a financial planner. They can help you with making further savings or investing your money to double up your wealth.
However, if you do not want to hire a financial planner, you can always take the help of –
- Several community centres provide low-cost workshops or classes on building personal budgets or finance. Occasionally, various credit unions or banks proffer courses in this regard as well. So, you may attend them.
- If your parents or any other family member has knowledge in this regard, you can take their help too. They might offer valuable insights on their strategies or what they would do if they were in your shoes.
- Finally, hiring a financial mentor can be beneficial for you as well. Unlike a planner, they will help you create a budget plan and save you if the budget-saving process is overwhelming your thoughts.
The Bottom Line
Keeping track of your personal finance can be a tricky job, especially if you bear every expense of your family. Hence, you should hire a mentor who can take care of your headaches and offer you the best suggestions.
However, if you are trying to do everything alone, maintain a notebook or diary. Make sure to fill it up whenever you are purchasing something or saving some money. In addition, there are some personal financial apps available on app stores, which can help you with it as well.