We have all heard the complaint; “January is too long”. Have you ever considered the reason for this, being mismanagement of our December salaries and bonuses during the Christmas season? Managing your finances goes beyond making a saving plan; it includes setting financial objectives, making a financial plan, paying attention to your spending, and avoiding debt. With these four steps, you can become more financially responsible and build wealth for the future:
Set Financial Objectives
Create a framework for what you want to achieve instead of aggressively investing your money which can put you at financial risk. Consider dividing your goals into long-term and short-term goals, such as stocks, equity, and mutual funds, and save your money accordingly. This way, you will be able to figure out how much and for how long you need to invest towards each objective. Also, speak to a Wealth Coach to help you determine investment options based on your financial objectives.
Make a Financial Plan
Make a monthly budget based on your net income. Budgeting allows you to keep track of your costs and stay in charge of your money. You will not have to guess where your money has gone if you keep track of your monthly spending. You can make realistic budgets for yourself by applying the 50/30/20 rule; 50% for needs, 30% for your wants and 20% for savings or paying off debt.
Pay Attention to Your Spending
It is all too simple to continue spending on depreciating goods, presents, and desires. For every money you spend on a present or depreciating asset, you should save at least 10% of it. In the long term, this modest amount of money will pile up in your savings! It is all too easy to be tough on yourself by limiting the things that make you happy. This may lead you to succumb to the pressure and overspend foolishly. As a result, it is critical to leave room in your budget for your desires in order to stay on track. When you achieve one of your financial goals, treat yourself to a nice dinner or a brief trip!
Getting Out of Debt
Following these easy salary management techniques can help you achieve goals such as increasing your savings or reducing your debt. Expenses that are not required can be deducted. You may save and invest more with your salary by preparing meals at home, and not purchasing the latest and most expensive gadgets. When you retire, this could turn into a source of passive income. Also, by making a monthly budget, you can reduce wasteful spending. Some employees have been known to create a monthly cost chart a day or two before getting paid.
Try these four points out for the year 2023, and you are sure to turn your finances around. Perspective is everything and once you shift your perspective with these guiding principles, you will be sure to see financial success soon!
Afful Jefferson PK