How to Manage Your Finances

You may know most of the factors when it comes to managing your finances wisely. However, the problem is applying them on a daily basis. Spending habits cannot be curbed or taught overnight, but taking the initiative will start a cycle where you are able to set certain goals, and stick to them for the rest of your life. This will not only prove beneficial in the long run, but will allow you to meet and fulfil your needs in emergency situations. The concept is uncomplicated, yet poses a challenge for all individuals from different age groups.

Instructions

  • 1

    Know your income

    Knowing what you earn will provide a basic platform for you to start the process. Review all sources of your income, and adjust it with your spending records. Review your fixed expenses, which you will incur on a monthly basis, before listing other miscellaneous expenditures. The latter estimation could be difficult to gauge, and to counter that, one will be making further compromises and adjustments, depending on the number of dependents.

  • 2

    Outlining target

    It is fine cutting down on expenses, but creating or outlining specific targets will make the process easier to accomplish. For instance, if you are married, then sit down with your spouse and list goals on how to raise more money, or reduce spending. A compromise is necessary as you are doing what is best for your family. Having common goals will make the practice a routine, knowing that everyone is on the same wave length and making extra effort.

  • 3

    Review your goals

    You probably will make a list of things to do. For instance, you will be setting an emergency fund first in order to cater for unforeseen circumstances such as medical expenses, etc. You may also require cutting down on borrowing through your credit card etc, or using it sparingly. Moreover, it is wise to pay large down payments on your home and car loans and pay the remaining amount in small installments. It is important that you back your goals with actions, and decide what is important for you and what is not.

  • 4

    Periodic Assessment

    Make sure to periodically check – after a few months - whether the process has worked for you. There is no point in going on if you face difficulty in saving and managing your money. Reduce the amount in saving or increase it, depending on your financial health.

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