How to Manage your Finances
Wouldn’t life be nicer and more fun if you always had money to spend and not have to worry about saving up, spending cautiously or handling your bills? Yes, life would be a lot better and we would all love to live it. Unfortunately, a life like that can only be fantasized. While it is impossible to live a life like that, we can only have a taste of it from time to time. The best way to do this is to properly manage your finances.
Poor finance management. It sounds really bad and you definitely want to stay as far away from it as possible. Surprisingly, as scary and nasty as poor finance management sounds, a lot of people, especially young adults, still suffer from it. Once you start making your own money, you take on the responsibility of managing it. Making money feels good, but you need to properly manage it to enjoy it.
As a young adult, here are a few important things you need to do to manage your finances and ensure smart money spending.
Create a Budget
Properly managing your finances requires you to do a lot of things and creating a budget is the first step to take. At first, creating a budget and sticking to it can be a bit difficult to achieve but it comes with a lot of benefits in the end. Budgeting helps you to be aware of your current financial situation. With a good budget, every cent you earn or spend is properly accounted for. This helps you to smartly handle your debts, save up for future expenses, balance your income and expenses, and most of all, ensure that you spend your money wisely and smartly. When creating a budget it is wise that you take into account all your expenses no matter how minor they may seem, jot down everything you spend.
Saving up is like having a parachute in a crashing aircraft – it’s your failsafe plan. As good and beneficial as it is to save, most people find it difficult to do. The major reason for this is that most times, people fail to set a savings goal as well as they try to hard to save to much at once. Without a good, reasonable and achievable savings goal, you might find it very hard to save your money, mostly because you’ll always be tempted to spend it. One of the things you should consider before saving is your income and expenses.
Make sure your income covers your expenses before attempting to save. Also, be true to yourself while saving. Do not make the mistake of saving too much. If you save too much and do not have enough money left to cover your expenses, you’ll end up spending your savings unnecessarily. If you make $1500 a month, please don’t try to save $750, as amazing as it may seem it’s not a balanced and realistic way to save. Financial advisers recommend saving 10% of your income, mainly because it’s a small amount and easy to stick to and we all know here at schquiz that with a little effort comes ability.
Take "Advantage" Of Credit Cards
We’ve all heard the warning; stay away from credit cards, especially if you already have a debt. This is mostly because you can easily rack up more debt or spend more than you have planned. However, you do not have to be scared of credit cards. In fact, credit cards can help your personal finances if you use them wisely. For instance, if you use your credit card responsibly over time, you can earn points that can help you achieve things you want! For example lets say you have a goal to travel every year. Now imagine saving up each year for this trip, when you can sign up with a bank that offers travel miles rewards for their credit cards users. Then use your credit card for purchases such as groceries, online bills etc, pay them back on time and before you know it you have a good amount of points you can redeem to help cover the cost of your ticket. It’s important however to not spend money you don’t have, if you have a 500 limit and only 400 in the bank but you want to buy a new laptop for 800 don’t do it, only spend what you know you can pay for! Credit Cards help you maintain good cash flow which is an essential part of budgeting your money!
Cut Unnecessary Expenses
If you’re going to manage your finances properly, you need to fully understand your expenses. This will help you to determine the compulsory ones and the ones you can do without. For instance, you pay $100 monthly for a gym membership, and all you do there is bench press – that’s $1200 a year just for benching. Why don’t you consider getting the necessary equipment required for benching and do it in your room or in your yard. You have to keep in mind that you have to manage your personal finances in order to enjoy your money. Take time to think carefully about things that consume your money that you can do without. Once you identify these things, cut down on the amount of money you spend on them or do away with them totally.
Being able to effectively manage your personal finances pays you in a lot of ways. You get to spend your money efficiently, you’ll have something saved up for a rainy day, you’ll steadily balance your income and expenses, and most importantly, you’ll save yourself unnecessary stress and headaches. As a teenager or a young adult who has just begun to earn for himself or herself, you are entering a new stage of life. Carefully planning and managing your finances will ensure smart money spending and will definitely make life a whole lot easier for you.