How many times have you put off vacations because of lack of funds? How long do you keep track of the time and how much each peso costs until your next payment arrives? Are you finding it hard to have fun with the rising costs of tuition, food, and other services? It’s happened to everyone and you can fix it with a few financial adjustments. We will be sharing some tips that will help improve your relationship with money.
Personal finances is the management of financial resources with a better view of the future. As the tools available to manage the money, they can be viewed as financial risks, goals, savings instruments, and capitalization. Personal finance tips will help you manage your expenses at home and keep you afloat without resorting to extreme measures.
1. Start your Financial Education
You can read books or enroll in online courses. The important thing is to understand the subject. This will allow you to understand the various products and services that are related to personal finances and help you make informed financial decisions.
Robert T. Kiyosaki’s book Rich Dad Poor Dad is a key resource for financial education. It will teach you, from two perspectives, how to deal with income, taxes, investments and financial challenges.
Little Capitalist Pig by Sofia Macias, on the other hand, is more educational and can help you make changes to your life that will lead you to financial success long-term. What’s more,
2. Be Friends with Budgets
You don’t have to give up control over your finances. Budgets can help you do that. Consider your monthly income and subtract your fixed expenses. Then, set aside a percentage to save. Any variable expenses you don’t want to give up will be covered by the savings.
The 50/20/30 rule is the best way to split your income. This plan requires you to allocate 50% of your salary for fixed expenses (rent, food, and services), 30% for variable expenses (personal or personal), and 20% to savings.
This table is flexible and can be modified to suit your needs. However, it will give you a better idea of what you should save and how much money you can afford to live your life.
3. Avoid Impulse Purchases
Be mindful of your budget. Make sure you carefully consider each purchase. Although the deals may sound great, many of us end up purchasing things we don’t need. It is difficult to ignore a product we find in the supermarket. You will end up with 2 items you didn’t intend to purchase.
Similar discounts such as Hot Sale or Good End can be found. We began to compare prices and decided that we would take advantage of the discounted prices, even though we weren’t looking at buying a new computer or a massage machine. You can do this if you’ve already thought about the purchase or if it is something that you need for your home.
Also Read: How Home Loan Interest is Calculated?
4. Identify your Income and Expenses
Start making accounts by taking out a piece of paper and a pencil. Make a list of your monthly expenses. Then, divide them into fixed or variable. What does each one mean? Fixed expenses are the ones we pay every day: rent, food, and services like internet and water.
Variable expenses refer to those that are directly related to your lifestyle. For example, eating out, coffee drinking, trips to the movies, and visits to amusement parks. This second list will help you identify expenses you can reduce more easily.
5. Create an Emergency Fund
Unpredictability is a good thing. An emergency can cause chaos and instability. You can plan for unexpected expenses and have a fund that will help you deal with them.
After you have established your balance, it is time to create an action plan for increasing them. Investing money can make your capital more profitable and increase the effectiveness of your savings. It also ensures that it doesn’t lose value over time. The most popular investment strategy at the moment is stock market, mutual fund, and property.
If you have 20% of your salary set aside for savings, divide it in half for a while and put one portion towards your emergency fund. You can improve your relationship to money by keeping track of your finances. It will also help you identify what you truly need and let go stress. Are you ready for them to be applied in 2022?