We already went through childhood and most of us have been given allowances by our parents growing old. At school, we learned how to save money to buy the piece of pancake for recess or buy that pocket book in the nearby bookstore. We learned the basics on how to control our finances—and this is through self-control and discipline.
As we grew as adults now and had jobs of our own, we realized that it’s hard to do this especially if we’re living from paycheck to paycheck. How do we save ourselves from getting a huge pile of debts we are not sure how to pay for? In this article, we will talk about valuable tips on how to keep finance under control.
How to Handle Money You don’t need to be a scrooge to call yourself a good money-spender. You just have to know how to spend it the right way. You may have different sources of income and you spend money in different ways as well. Some are for investments (short-term and long-term), others are put on the stock market, real estate, business capital financing, bank savings and others to give to charity. But all of them boil down to how you handle the money you have. The first rule here is to just spend less than what you earn.
This principle is so easy to comprehend that even the younger you can get it. Without a coin to get a candy, you cannot pay for it and thus, you have to get another coin to fulfill your desire. In present times, you are enabled by credit card institutions and banking companies to get a loan. Having this more money should not give you an excuse to spend more than what you are actually taking in. Else you would have multiple deficits or a negative margin.
As you overspend each month, you will just become a sufferer of your own finances. It is important thus to point here that you should not borrow against your future, for the future is always uncertain. You won’t know for sure that you will keep that job for the next year. You won’t know for sure that business will almost give you good returns or the market will always be trending up high to give you profits. Debts may be inevitable but it is up to you to know the worth of the things you buy.
Get extra money each month as leftovers in case you are in short of money next time. Aim to always be prudent and wise in getting the most return for your time and effort from your purchases. Valuable Tips to Keep Your Finances under Control.
- Set Priorities You might have the money to buy the things you want this week but this money is not enough for all the expenses you had last month. The right way to go is to set priorities when it comes to your budget. List down all the items you need to purchase and on a separate column, mark if the item has high, medium or low priority. Those falling under low priority are items which you don’t necessarily have to own at this point. On the surface, you will only be prompted to get those having high priorities. Before leaving the house and proceeding to the counter of shops, make sure to review your list and check if everything is in good order.
- Set Budget Limit after having your priorities, you have to set a limit to your spending. You do not have to use up all your savings every month unless you want to become totally bankrupt. Sit down and calculate how much you can save per month and break the items down to strategically know your expense limit. A good way to guide you is to have categories of the items. Examples are transportation, food, wardrobe, toiletries, and donations. This will better give you an overview before coming up with a whole picture of the limit you intend to set.
- Use Cash Instead of bringing your debit card and credit card together with you all the time, try to manage only using the cash in your wallet to buy things. You would feel more compelled to save that money because you view them as your last and you don’t have anything more to spend. This will help you keep spending under control, and it will also make you add up all the loose changes you can accumulate and count at the end of the year. You might be surprised on how much you have collected and you can buy yourself a treat.
- Manage Debts before taking out money again to buy a luxury item, think about how to clear your debts first. You should have a positive standing in banks and your financial accounts before adding more to the problem. Establish a goal to pay back all debts so you can start from a good square, this time, around and manage your finance with an improved discipline and outlook. When you have new debts, make sure to always pay on time as late payments will often cause interests and excess fees in the end.
- Be Aware On a practical note, you should be aware of your expenditures and investments before taking the step and decision. Know about the terms and conditions in using your credit cards and getting yourself a loan or mortgage. Keep away from financial troubles that may arise in the near future because of lack of complete knowledge about policies.
Don’t put a strain on your credit report and make it a habit to check everything before signing any contract, agreement or paper regarding your finances. Money management is a learning process and the degree of success here can be hard to gauge. But we have to be reminded that we can do this as we already have been practicing this through childhood.
Now we should continue living the same basic principles and apply them in everyday life. Author Bio: Kristen Francis Willis is a Financial Consultant by Profession. From time to time, she does some side business with her photography skills. She loves taking pictures, capturing every moment means a lot to her. She’s currently building her reputation as an online writer with the help of PFMP.