You don't need a high paying job or a windfall from your parents to achieve your financial goals. All it takes is a bit of money management to control your spending so you can save for your dream vacation, wedding, or pay your debt. In this blog post, we will share four tips that will help you manage personal finances and improve your financial position.
You don't need a high paying job or a free money windfall from your parents to achieve your financial goals. All it takes is a bit of money management to control your spending so you can save for your dream vacation, wedding, or pay your debt. In this blog post, we will share four tips that will help you manage personal finances and improve your financial position.
Money management tips
Refer to these tips if you ever find yourself spending more than you should or needing some money management tips.
Keep a percentage of your income as your savings goal
Saving money helps you navigate out of tricky situations, meet debt obligations, and have rescue funds in place. However, many people don't know how much money they should keep in their savings at all times.
The goal of saving is to keep a certain amount of cash in your bank account. To figure out that amount, double your monthly income. This amount should be your first savings goal, and it would limit how much you should have in your savings at all times.
For example, if your monthly income is £4,000, you should have at least £8,000 in your savings at all times. Plus, your account shouldn't go below £8,000.
Split your income
Don't keep all your money in one bank account. This way, you can't track how much you spend on groceries, gas, and bills. You allocate a fixed amount by splitting your income into different bank accounts dedicated to each portion of your monthly spendings. Doing so helps you know which section of your monthly budget impacts your income.
Pay your dues on time
Delaying your bills or debt will result in financial penalties that will mount up to an amount you can't pay in a lump sum. Therefore, always pay your dues on time. If you don't have enough money for debt repayment or bills, you can look into whether a quick loan from Jacaranda Finance can tide you over until payday, or whether a consolidation loan for all your debts with a lower monthly payment could be the right solution for you. It’s important to assess all your options before taking on more debt however and it should only be used if you can afford to pay it back. If you can’t afford your current debt payments or bills, then seek professional help and guidance on how to manage debt you cannot pay.
If you can’t save start investing
Many people have difficulty controlling their expenses because they have ample savings. Most of us would run to our savings when we fall short of our monthly budget. If breaking your savings account has become a habit, you should start investing that money instead to reduce the temptation of touching it and spending. You can buy stocks, bonds or invest in real estate. The money you take out of your savings, if you have enough, could finance your real estate loan for example. This will help you reduce excess spending and put your money in an investment for the future.
The last tip - 70, 20, 10 rule
Splitting your income, paying your dues on time and investing in profitable opportunities are all great but money management is challenging and requires great willpower and financial planning. The best way of utilising your monthly income is to follow the 70, 20, 10 rule.
70% - should go to your living expense
20% - should go to your savings
10% - should go to your retirement funds
By following this and the tips we mentioned above, you can turn your life around because money management is the key to improving your financial position.