Source budgetplanners.net – When you grow up and begin earning, you have some very crucial responsibilities. One of these responsibilities is to manage your funds as it has a direct effect on your living standard such as what you drive, where you live, and everything you do. Therefore, it is essential to learn how you can manage your funds and improve your financial situation. When you start managing your money, you will realize that your life has become easier, and you are free from financial worries. Here are four steps to guide you on money management.
Step 1: Keeping Track
The very first step to managing your funds is to figure out where your money is going. Start tracking and evaluating your spending. You can track your funds by writing your expenditures on paper or a spreadsheet and keeping the receipts and bills. As soon as you make a purchase, make note of it; make sure you are doing it accurately and honestly. Next, evaluate your purchases. Is it worth spending on the things you spend on?
Step 2: Budgeting
After you determine what you are spending on, you need to set up a spending plan or a budgeting plan. Figure out how much money you are going to spend in each area such as utilities, grocery, allowances, personal shopping, and fuel. Make sure you also include some unexpected expenses like vehicle repairing. Remember the rule is to spend less than you earn. There must be some areas where you can reduce the amount you spend. Cut your spending and follow the budgeting plan. The job does not end with the plan; you need to review the plan after every month and when there is any notable change in your spending or income.
Step 3: Saving
Once you are in control of your funds, that is when you are budgeting and spending consciously. The next thing to do is start saving for the future. It is necessary to set aside a certain amount of your income to get ahead financially. The easiest way to save money is to ask your bank to transfer a specific portion of your funds into a savings account. Ideally, saving ten percent of your salary is preferred and a good amount to begin with, and after a few years, you can increase it to twenty to thirty percent.
Step 4: Getting Rid of Debts
This step is for those individuals who use credit cards as the debt of cards can really be a big problem. The best way is to pay as soon as you get the bill at the end of the month. If you do not pay every month, you should probably stop using them or just stop carrying them with you. Using credit cards also leads to overspending as there is a risk you can spend more than you earn. Hence, you should totally avoid using these cards. You can also communicate with your bank and request to lower the rates on your credit card debt.