Money makes the world go round – but when you see your finances slipping through your fingers, it can be enough to set you in a slight panic.
When you are reaching the end of the month with barely any money, you might want to take some actions. So, how do you manage your personal finance planning like a pro? What can you do so that you no longer have to worry about your finances? Well, here is what you can do:
1. Create a Budget
Everyone who has even the smallest source of income should be able to do this. As long as you know where your money is going, you will certainly know where you can make some changes so that you can actually improve your finances.
Track your spending; see exactly how much you spend every month. Before creating a budget, you should leave a “trial month” where you record how much money goes where. What’s the average on house maintenance? How much do you spend on rent or mortgage? What about groceries; how much money goes there? Make an average and see whether your income can make it or not.
Create categories for every type of expense – but don’t forget to also leave some money for entertainment and savings. Failing to do so will only have you digging into the money for groceries – or worse, household bills – which certainly won’t do you any good.
2. Spend Wisely
Restraint is anyone’s best friend when it comes to personal finance management. While you don’t need to limit yourself too much, you should also not indulge too much either. Whenever you are faced with a purchase, ask yourself this question: do I really need this? You might want to leave yourself some time to think – particularly on a bigger investment.
Always spend only what you have – not what you hope you are going to make. Also, if you can rent or borrow something instead of just purchasing, it might be a better alternative. Remember those DVDs that are gathering dust in your home? Well, you could have just rented those; it would have been a lot cheaper.
3. Pay Off Your Debt
This might seem easier said than done – but until you get rid of your debt, your personal finance won’t have any good breaks. So, before spending your money on anything else, you might want to get rid of your debt first.
It may be tempting to only make minimal payments – but whenever possible, try to pay out more. This will help you get rid of debt faster, and it will also help you improve your credit score.
4.Take Out a Payday Loan
This might sound counter-productive, but sometimes, a loan may be what actually saves you from ruining your finances even further. In the event of an emergency, it is much better to get some online loans instead of chipping away from the other categories. Plus, considering that some loans in Kenya can be paid over more than a month, they might even do your finances good – and not create a big hole there.
5.Set a Savings Account
A savings account can literally be a lifesaver. At the same time, you could stash some SOS savings into your piggy bank in the closet – but that will be far more tempting to “break into.” At least if it’s in the bank, you’ll know you’ll only go for it in the event that calamity strikes – and not because you need some cash to pay for that pizza you are so tempted to order.
Plus, if you set your savings account, your “babies” will also grow interest. The more money you add in there, the more you’ll win in interest. You’ll practically be making money by putting it aside. If that’s not a great method to invest your finances, we don’t know what is.
In a nutshell, your finances start with you organizing your budget. Don’t spend more money than you make (obviously), try to get rid of your debt, and try to at least set something aside every month. It might seem difficult to do at first – but eventually, it will become second nature to you.