Personal Financial Management

• Author: Jacob Greene
• Posted: 2024-07-31

Saving money is a sour topic for many. You have often been disappointed because you promised to save, but now there is nothing you have saved. At times the money is too little even to save. However, time and again, the sermon of saving is unstoppable. Saving is a challenging task for many. Building wealth has no secrets. However, drowning in debt and envying your rich friends involves not keeping. Therefore, you have no option but to save. Saving $10 a day will make a difference. It would be crazy not to think about your future. These three money management principles will help you learn how to save with little struggle.

Budgeting

To save money, you have to have a budget. You must get to know where your money is going before you try or think about keeping it. To know where to cut down or where to add on, you need to know how you are spending your money. Thus, the significance of a budget.

Next, list your monthly expenses such as utilities, debt, payments, entertainment, and housing. After making a list then you can know how much money you spend in a month. The information will help you see the problem areas and which need a little cut-down. You may find that you pay for channels that you don't even watch. You might also have subscribed to a gym membership that you don't even attend.

These findings will help you stop the subscription and add extra money that you would consider saving. Besides, the list of expenses and utilities will cause you to eliminate unimportant things that cost money. You can consider doing your pedicure after a month instead of after every two weeks. You may also consider staying in on two weekends instead of going out every weekend. These eliminations will play a significant role in reducing your expenses.

An example is that you can use the money you mostly use in takeout meals and save it instead of having takeout thrice a week, then you can have twice and save the money. This guideline enables you to kick of saving. You don't need to save a million dollars to feel good about yourself. Small steps will get you there eventually.

Pay yourself

As a successful implementation of the budgeting guideline, you should hopefully have a few dollars to spare for your savings. Most people pay bills and cater for any expense they need after getting their paycheck. Thus, they are left with only a small amount of money.

The money left after expenses and utilities might be little that you fear saving it, as a need may occur. Therefore, you must think of your savings as another expense that needs to be met. If your water bill is overdue, you ensure the payment is made early.

So should be your savings. Ensure that you put something aside every month and treat it as a bill to maintain consistency. If this plan proves to be hard, then you might consider having an automatic savings plan. The method ensures that the savings monies are cut before you get the chance to spend them. You might consider a direct deposit into your savings plan. The direct deposit ensures that you don't miss the money when it is slowly growing in your savings account.

Spend less than you earn

If you can hack this guideline, then you are good to go. It is human nature to live within or beyond our limits. It is, however, vital that you critically think about how you spend your money. Spend less than you earn. Harsh, but worth it. If you make $50 every week and spend $60 a week, you have a $10 deficit. If this continues, you will need other sources to finance yourself - a credit card, perhaps.

However, a credit card has interests, and before you know it, you are drowning in debt. But if you earn $50 a week and you spent $48, then you are safe. The extra $2 will go to savings, which, with time, will account for more. A good lifestyle is impressive, and anyone would kill for it. Nevertheless, consider a little stretch today for relaxation tomorrow.

The above guidelines are not laws or must-dos. They are common-sense principles that only require your discipline with minimal effort. The three principles of money management build your financial foundation, a simple, effortless way to start building your wealth.