Managing Your Finances To Avoid Financial Trouble

Managing Your Finances To Avoid Financial Troubles
Everyone needs to learn how to take care of their personal finance. Budget planning is paramount, or you just might find yourself staring at a negative cash balance at the end of the month no matter how much money you earn. Worse, thanks to your terrible spending habits, you could even wind up in debt.
 
The good thing about learning how to budget is that you can totally do it on your own, as long as you know how to do it. Working on your budget on your own will take some work, but after the first two months and everything is set, you will be managing your finances with a breeze.
 
If that isn’t possible, you can choose to employ a professional to help you manage your finances. However, if you are already struggling with your monthly expenses, adding another to the list of your expenditures can be a bad idea. Here are some tips you can use to manage your personal budget.
  1. Establish a measurable financial objective

    A guy is formulating financial goals to focus onWorking on your personal finance towards having a positive net income every month will be hard to do if you do not formulate financial goals to focus on. The importance of having achievable financial objectives is that it will allow you to have something to look up to when making purchases even when you’re using your credit card, something that some of us might forget needs to be paid off monthly.
    Having good financial objectives allows you to set a benchmark or a measuring tool for your financial performance, which will allow you to know if you can still add up to your expenses or not. Your financial objective must also be achievable, or else you will accomplish so little that you will be unmotivated before long.
  2. Use a budget tracking application

    cellphone in man's hand looking at the budget tracking appIt is important that you know how much money you’re spending before you can formulate a strategy to reduce it. As such, it is important to keep a record of all the fixed expenses you have like your student loans, mortgage, bills, and credit card debt in order for you to make adjustments to your current personal budget.
    It’s also easier to keep track of your daily, weekly and monthly expenses on a regular basis with the help of a budget tracker or app. There are many free and paid options that you can download regardless if you are using an Android or Apple smartphone. Some of these apps even have an integrated savings reminder reminding you to set some of your fixed expenses aside for your retirement savings, shopping checklist, and other features that will greatly help you in keeping track of your money.
  3. Commit only 50% of your revenue on basic needs

    man with calculator calculating basic revenues

    You will not be able to have substantial savings if you are spending more than 50% of your monthly income on your daily expenses. As such, you should tweak your budget to exclude things that you don’t really need. Once you start tracking your expenses, you will be amazed at how much money you spend on things that are not really necessary, like fancy food, gadgets, entertainment, and other nonessentials. It is okay to have a good time once in a while, but you should stop as soon as your expenses on non-necessary things start eating into your monthly budget significantly.

    You will begin to see a positive in your net income once you stop dedicating more than half of it on monthly expenses.
  4. Have more than one bank account

    two-person discussing financial recordsUnless your savings and monthly income are too low to warrant being put into different bank accounts, you should have more than one savings account. This is because if you only have a single bank account, it will be easy to withdraw all the money in there without leaving anything for your savings.
    Even if you think your savings would be too low, it would still be wiser to open up a few savings accounts to separate your money into different places. In addition to not being able to withdraw all of your funds at the same time, it will be easier to keep track and make adjustments to your expenses and savings if you dedicate a separate bank account for each of them instead of just one.
Below are a few of the expenses and savings that should have their own dedicated bank account.

Account for your everyday expenditures

woman calculating everyday expenditures
This is the account that you use to pay for your daily, monthly and fixed expenses like your credit card debt, student loans, and bills. As such, the money in the bank account for your daily expenses needs to have a good ATM coverage if ever you are required to withdraw cash. This is important since you do not want to be locked out of your expenses account while you need it.

Monthly income account

woman documenting your expenditures
This is the account in which your savings will be deposited, in accordance with your financial goals. Transfer a part of your salary that you can afford to save to this bank account, and do not use the funds for your daily expenses and bills. It is also possible to automatically set a deposit to this account so that you will not be tempted to skip savings for a month. This account does not require a vast network of ATM’s since you will rarely withdraw from this account.
However, having good ATM coverage is still nice to have regardless of the purpose of the account. You may choose to get a passbook account with no ATM if you are easily tempted into spending your savings.

Account for your life goals

man looking at his laptop planning for his life goals
In addition to setting money aside for savings and expenses, it is also important that you save for the various goals that you have in life. It can be a home or car purchase, for the schooling of your kids, etc. By having a separate account for your life goals savings, you can easily track your progress and not be tempted into spending it on other things.
If budget planning is still not enough for your monthly expenses, why not take out a short term loan from a licensed money lender? You can get personal loans, salary loans, and more at Fortune Credit. Click here to visit our website to know more about our offers, or contact us at 6777 1887.
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