Personal financial management is a subject that is not taught in many schools, yet it is really important in regards to our lives. We all have to deal with our finances at some point, and knowing how to appropriately manage them could prove vital in relation to our financial security and a healthy credit score. This subject needs to be taken seriously because how you manage, spend and invest your money can have a profound impact on your life. Usually, managing your finances feels like nothing but a lot of paperwork and numbers. You note down how much money you’ve earnt compared to how much you spent and the tricky part is making sure the latter is less. The way you manage your finances comes down to psychology, habits and the values you chose to live by. So at the end of the day it’s not all about math, sometimes the mind-set is just as involved as numbers are and if you do ever find yourself in unsecured company debt then there’s are always options to help- for example a company voluntary agreement is a preferred method to help companies with their debt.
Ways to keep your finances up
- Spend less money than you earn: this might sound very simplistic but it’s very important for your future. If you spend more or exactly what you earn a year, you’ll never be able to prepare for emergencies or major life changes. This is why, spending less than you earn allows you the freedom to save and prepare for the future. With this said you can also deal with the inevitable crisis that life throws at you- the bigger the gap between your incomes/spending the better.
- Always plan for the future: this leads on from the previous bullet point. I am not talking about retirement, more so on the savings side. This will help avoid debt and pay for anything out of the ordinary as you have the money saved up. Plus, building-up funds will help with those unexpected car repairs, unnecessary kids spending and any educational costs. At the end of the day you never know what is awaiting you in the future, so having money saved up will allow you to be prepared for the worse.
- Knowing what you can afford to spend: by planning and budgeting, you should be able to give yourself an idea of what to spend for the month. By having a good understanding, you can gives yourself a set amount of money to spend which allows you to save so much more than just spontaneously spending your money.
So to properly manage your finances requires a bit of resilience and a significant amount of patience. Being organised is a vital skill because if you budget sensibly, you will notice the money stocking up in your account and you need to be smart too. Know what to spend and what not to spend, only buy what you need and make sure you are saving more than you are spending throughout the month, because if you do this, you will soon see a difference.