Managing your finances can be a difficult task especially if you have a habit of mindless spending. It is also thought that when we become more stressed, we tend to spend more as a kind of ‘retail therapy. Therefore, it is really important that we find techniques to reduce our spending and manage our finances. Take a look at some of these techniques and you could make a huge difference in your future.
Aim to Save 20% Or More Each Month
If you have ever heard of the 50/30/20 rule, this implies that we should use 50% of our finances each month on essentials, 30% on non-essentials, and 20% on savings. Sticking to this rule may be a great way for you to ensure that you save money each month without spending every last penny before payday. I do not need to go into great depth about why saving money is beneficial for your future, but it can help you to save for a house, wedding, car, or holiday. There are also lots of reed courses that can teach you about saving money and the best ways to do this such as looking for high-interest savings accounts.
This way of spending and saving is really useful for becoming more in tune with your financial spending. It can help you to see how much you spend on non-essential items and how you can cut down on these to increase your savings.
Build an Emergency Fund
One of THE MOST important things when being more in tune with your financial spending and to make good financial decisions is to build an emergency fund. This is your fall-back. For example, maybe you get into a crash and have to pay for car repairs. Or maybe you lose your job, and you need money to keep you afloat until you find a new one.
This is why we should all build an emergency fund if it is in our means. You should aim to save up 3 months’ worth of salary so that if you lost your job, you have 3 months to find a new one. Furthermore, the emergency fund should not be confused with free spending money. You should not touch this money so that if there is an emergency you will not have to dip into your free spending money.
Plan Out a Workable Budget
Having a budget is absolutely essential if you want to become in tune with your finances and make the best financial decisions. This allows you to stop your spending when it becomes too much and will allow you to make better calculations about your savings long term. You should plan out your budget for your weekly free spending money. If you completely restrict any kind of free-spending money such as going out to get a drink, then you are more likely to make impulsive decisions and end up spending more than you would have originally.
It is also important to have a budget when it comes to rent or mortgage payments so that you do not get a house or flat that is too expensive for you to live in.
Take a Course in Finance
The final point I want to make in this article is taking a course so that you can gain some knowledge about finances. This can help you to make better financial decisions long term. You could do a degree in Finance if you are really interested, or an HND as a shorter learning choice. Of course, reed courses are also an option.
I hope that you enjoyed reading this article and learned some new techniques to change your future with finance.