Money makes the world go round so
ergo, a lack or mismanagement of finances can make your world stop.
When you take steps to simplify
how you manage your financial situation, you start being proactive with your
money, and it becomes so much easier to deal with on a daily basis.
Think before you spend
As trivial as this may seem, when
you’re faced with a spending decision, especially a large purchase decision,
don’t just assume you can afford something. Confirm that you can actually
afford it and that you haven’t already committed those funds to another
expense.
If you can’t buy something five
times over, you probably can’t afford it.
Remember that just because the
money is there doesn’t mean you can make the buy.
Track your spending
Start writing down every kobo you
spend for 30 days. Once you do that, you start getting the feel for what you’re
spending on everything, then you can begin a monthly budget.
Make a budget
Once you have an idea of what you
spend in a month, you can begin to organise your recorded expenses into a
workable budget.
Your budget should outline how
your expenses measure up to your income—so you can plan your spending and limit
overspending. In addition to your monthly expenses, be sure to factor in
expenses that occur regularly but not every month, such as car maintenance.
Instead of focusing on the
process of creating a budget, focus on the value that budgeting will bring to
your life.
Savings
One of the best ways to save
money is to set a goal. Start by thinking of what you might want to save for.
Here are some examples of short-
and long-term goals:
Short-term (1–3 years)
Emergency fund (3–9 months of
living expenses, just in case)
Vacation
Down payment for a car
Long-term (4+ years)
Retirement
Your child’s education
Down payment on a home or a
remodeling project
If you’re saving for retirement
or your child’s education, consider putting that money into an investment
account.
While investments come with risks
and can lose money, they also create the opportunity for compounded returns if
you plan for an event far in advance.
Build an emergency fund
When you have money set aside for
emergencies, you’re not tempted to go into credit card or other debt to deal
with it.
Everybody has the occasional
emergency, and if you are already prepared when it comes, that’s one less thing
you will have to worry about in a time of crisis, and you won’t have to spend
months or years paying it off.
If you’re married, have a joint account
If you’re married, there
shouldn’t be “his” money and “her” money or “his” bills and “her” bills. All of
it belongs to both of you.
So always deposit all of the
money into one central checking account and distribute it from there. Doing
that fosters good communication and, along with a budget agreed on by both of
you, will eliminate money fights.
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