We all would love to maximize our hard earned money in every possible way, right. So the best thing to do is to start sorting out our finances to make it organised.
It’s not easy for everyone to determine if their way of spending is actually a lot like living beyond their means. That is basically a YOLO life where you spend too much of what you can actually afford. But what you need to do is to put things under control. Whether you’re an independent or not it’s way better to live a comfortable life while leaving financial worries behind.
Now having said all those things, let me help you manage your money thru my easy to follow tips. But before we go straight onto the list, let me just feature a very essential tool that you’ll be needing along on your financial journey. Aside from discipline of course, one should have a PFP – Personal Finance Planner. Mine, I got it from two ambitious, independent and radical young ladies from Budget Squad Manila. The planner will help you keep track of your daily income, expenses, savings and practically all that involves “cashing cashing” (money). Okei, let’s get started!
Determine Income & Expenses
Pretty easy, take note all the money that goes in and out of your pocket, bank, or wherever you store it. Basically, learning the concept of Sallary – Expenses = Savings is a good start. There are a lot of things that we have to spend for like utilities, rent, bills, groceries, and the list goes on. It varies from one person to another. The key is to know what’s left from your money.
In general, you should be saving 15% of your income every cutoff. If I hear you say ‘oops’ then start sorting your expenses. While if it’s an ‘oh yes’ then you’re doing fine but never be too complacent.
Manage Disposable Income
Simply put, it is Income less Deductions (tax, charges,etc) – this is the money that you cash out every pay day and where you deduct expenses. By adjusting your way of spending it you can ultimately maximise the amount of how much you can save. It may result to less shopping, movies and night outs but if it’s for the better then why not do it.
Did you know that you need at least 6 months worth of your salary as savings before you should feel safe in case you either quit or lost your job? It is fundamentally important to save money if you want a better future or retirement.
Classify savings as expense, that way you are bound to save a fix amount instead of waiting how much is left in your pocket at the end of the month. If you don’t set a value you will have a mindset of spending more on what could be unnecessary things. Multiply your disposable income by .15 or even higher and that is how much you should save.
Pay dues on time
Bills from credit cards, loans and utilities can accumulate extra charges if you pay late from due. Practice yourself to always pay before overdue to avoid wasted money. Alternatively, you can set up direct debits from your accounts to make life easier.
Have 2 accounts (Income / Expenses)
Not all of us are great with balancing money in and money out. So, one way to avoid over spending is by splitting your treasure chest into two. One for receiving your income (money-in) which alternatively serves as the savings vault as well and the other is for expenses (money-out). That way you get your savings secured ‘coz you have a dedicated card/account to use for your expenses.
These are things that I just learned as well, and trust me I learned them the hard way. I hope you guys were motivated or got something from it at least. Make yourself financially savvy ‘coz it’s more than just a cool thing, it benefits your future at large.