7 Great Ideas How to be Better with Your Money
Hello everyone, I am happy to welcome you to my newest blog post. Today’s topic is a pressing one in our world today. We see people make money and returning to square one and starting all over again. We’ve even heard stories of people who went from extreme affluence to abject poverty and you can’t help but wonder why and how this happens. So, I have decided to share this topic with you today because I don’t want you to end up like those people.
Have you really wondered why rich people sometimes go broke? Why does it seem like huge amounts of money seem to disappear into thin air without any obvious expenditure, like when you make money but cannot seem to account for how it was spent?
I will be sharing some tips with you that can help you better manage your money. Financial stability is something that everybody dreams of, but only a few achieve. Some people feel that they must be earning several million before they can establish financial stability, but that is very far from the truth. No matter how small you earn, you can learn how to be better with your money and that is what I will be showing you today.
How to be Better with your Money
Understand your Money Flow
To better manage your income, start by understanding how your money has been earned and spent in the time building up to this moment. It might seem irrelevant but trust me, it is the first step to being better with your money. Understanding your money flow means that you will identify your income and your expenses.
For income, calculate all the money that comes into your purse monthly. Then check your expenses and see how you spend money in a typical month. You might need to keep a journal where you record each amount that comes into your life and each amount that goes out. Treat it just as large organizations treat their balance sheet. In case you are asking if this is necessary, ask yourself why an accounting department is such an important department of any functional organisation.
It is when you have discovered the normal path your money takes in a typical month that you can start identifying key issues like overspending and spending on frivolities. For instance, if you add your expenses and subtract it from your income and you have a negative value, then you seriously need to cut down on expenditures.
But if you subtract your expenses from your income and you still have some left, then make concrete plans to either save or invest this remnant rather than wasting it just because it is there.
Decide on your priorities
Economics has made it clear that human wants are insatiable, so you just can’t drift off and start going after every single thing you feel you need; it is a path that leads to financial damnation. First, you must understand that there is a difference between “needs” and “wants”.
While needs are things we can’t do without, wants are things we can forgo because they are not very pressing. However, the irony is that people just combine their needs and wants into one massive bunch and make a mess of it. Start by deciding what your priorities are.
Create a budget
Just like every other good financial habit, you will also find this difficult at first. But it is very important. It is as important to your money management as windshield wipers are important in the rain. You know how the wiper gives you a clear view amidst the numerous droplets of water, so does budgeting grant you clarity in a world full of numerous wants.
Every month, create a budget and stick with it. Allocate percentages to every aspect of your expenditure. Decide the percentage that goes to food, self-development, savings, investments, emergency and so on.
When you create a budget and you stick with it, you will start experiencing balance because you will hardly run out of cash since you have it planned out from the onset. You will not just walk into a store and purchase an item simply because it caught your fancy. It is unplanned purchases like this that kill money faster.
Have an emergency saving
You know that sometimes, an emergency will present itself, but it’s nothing to worry about if you budget properly. Ensure that you allocate a portion of your money to your emergency fund and keep adding to it every other month so you will never be stranded because life is unpredictable.
To maintain a conducive atmosphere for healthy life savings, take a look check out Eco Bravo’s blog on eco-friendly means.
Set Saving Goals and Make Saving Automatic
I expect that after you must have kept track of your money flow and also cut down on frivolities, you will start having some extra bucks to your name. What do you do with this extra money? Set goals for the amount you want to save daily, monthly or annually, depending on what suits you.
You can make the saving automatic by having an arrangement with your bank to transfer a certain amount of your income to your saving account at a predetermined time.
You can continue saving if you don’t have an appetite for risk, but if you have, investing it is even better. I say that investment is better because, with savings, your money is losing value where it is because money loses value over time. But with investment, you are increasing the value of your money if only you invest wisely.
If you choose to invest, understand that every investment has some form of risk attached to it. This is why you must only go for low-risk investment opportunities. Take time to study and understand whatever it is you want to put in your hard-earned money. Investment publicity can attract you and family and friends will tell you how amazing the investment opportunity is. Don’t be carried away. Remember, your money, your rules!
Let me also add that while you are looking for an investment to make, please, by all means, do not fall for the get-rich-quick schemes. Understand that if those things were real, everybody would be a millionaire.
Financial stability is something you must achieve intentionally. Most people just make money and spend it and the cycle goes on and on. I need not tell you the endpoint of that method because most of us have been there before and we know how it ends. If you must be financially stable, you must do something differently. Use the steps above to be better with your money.
Recommended books for further reading:
- The Finance Book — Stuart Warner
- Intelligent Investor — Benjamin Graham
- How to Own the World — Andrew Craig
- Money: Know More, Make More, Give More — Rob Moore
- The Ultimate Finance Book — Roger Mason
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