Most of us have had to learn the hard way when it comes to making bad financial decisions and as this is something that you are not taught in schools, you have to learn along the way how to properly manage your cash flow. If you have set financial goals that you need help to reach, carry on reading to find out more about how you can better manage your money.
How to Better Manage Your Money
Keep Track of What You Buy
When you are first looking to better manage your money, the first thing that you will need to do is see where exactly your money is actually going! This means that you will need to keep track of all your expenses and account for every penny that you spend. Once you have done this, you can then see how much money you need to budget for different categories such as your groceries, your energy bills and your mortgage.
Make A Budget
With the breakdown of where your cash is going, you will then need to create a budget based on this information. This will allow you to take control of how much you are spending and crack down on the areas in which you are over spending. As part of this budget, it is also important that you look at other big expenses that will come up during the year such as car maintenance and Christmas!
Put Money in Savings
Within your budget, it is vital that you also plan how much you are going to save each month. We would recommend that you put away 10- 15% of your income and make this a regular expense that you don’t even have to think about. If you are finding that you cannot save this much, then it may be time to take a look at other areas of your budget that you can cut back on.
Choose the Right Tools
If you have specific goals in mind that you are saving for, then you will want to choose the best way to save for it that will make the most out of your cash. For example, if you are saving for short term goals such as a holiday, then a standard savings bank account where you are earning interest is fine. However, for long term goals such as saving for retirement, you will want to make sure that you are using the correct account that is tax efficient for your savings.
What Are You Saving For?
Trust us, we know that saving money can be very difficult and so this is why you should make goals of things that you want to save for as this will be your motivation each month. This can be anything that you want from saving up for your first home, to saving up for a spectacular holiday. When you know how much these things are going to cost you, you can then calculate how long it will take you to reach these goals with your budget.
Budgets are so simple to make, so hard to follow sometimes and yet the most powerful tool when it comes to staying on track with your money.
I am very bad with savings but of late, I am being very conscious to keep a tab on expenses. I have two bank accounts, one for salary debit and expenses while the other is to save money that I make. A very helpful post on managing finance.