Establish a measurable financial objectiveWorking 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.
Use a budget tracking applicationIt 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.
Commit only 50% of your revenue on basic needs
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.
Have more than one bank accountUnless 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.
Managing Your Finances To Avoid Financial Trouble
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