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Unless you are a billionaire, you need to be worried about your finances. In fact, even if a billionaire wishes to retain the current financial status or augment it, he or she should get the finances under control as well. It goes without saying that money is one of the most important things in this world that we live in. It should be managed efficiently or else it can cost you an arm and a leg. So, this article is here to help you look through your numbers and assist you in making better, informed decisions.
1. Cover the Necessities
Whether you want to save your money or invest it somewhere, the first and foremost priority you should have is to make sure you have enough to get your basics covered. These include your rent, food, transport, utility bills, etc. They must be taken care of first as they will make you secure and keep you stress-free for the whole payment duration.
Do not compromise on this spending or else you will always be under pressure. Moreover, this will keep you from pursuing your long-term financial goals. Get rid of the obvious financial expenses at the start of your financial period and then go for further financial decisions.
2. Take Care of your Debts
Once you have set aside or spent money on your basic necessities, it is time to turn to your debts. They may seem intimidating, but they need to be cleared. You might even want to just leave them there and carry on with your life, but it is not going to go away until you pay them off.
This sounds overwhelming, but if you take it step by step, you will be able to lessen it over time and hopefully get rid of it eventually. If you choose to ignore paying your debts or put it off until later, it will keep adding on and the interest fees will become exorbitant. So come up with a long-term plan to completely write off the debt by consulting with your financial manager bank.
3. Start from a 1000
It is always better to come up with a number in order to motivate yourself to save. Depending on your financial capacity, you might choose a number of your choice. A 1000 in your currency, however, should serve as a sound ballpark. It gives you a starting point and a goal to achieve. A defined number encourages you to work towards it.
Furthermore, you can build up your savings gradually from the 1000 to 2000 or 3000 or even more. This will be the stepping stone and will be helpful in developing a habit of saving money for the future. Not many people have this habit and therefore, it costs them a lot when they have to spend a handsome amount in case an emergency befalls them. Hence, you must be prepared to set aside a certain amount of money for uses in the future.
4. Watch Your Spending
This depends on your spending patterns – where do you spend and how much do you spend. First, come up with a priority list and decide where do you want to spend more or less. If you wish to buy a house, cut on your other less important and unnecessary expenses until you have bought the house.
Even if you are going out with your peers, have a strong hold of your wallet and do not just lose track of your money; don’t spend as much as you like. Keep a record and decide how much you will spend there prior to leaving your house. Do not deviate much from your estimated amount. Sometimes skipping lavish lunches and going for equally good restaurants is a good and frugal idea too.
5. Pick your Mentor
If you’ve given your CMFAS M5 exams, then this process of managing finances will become a whole lot easier. If not, you need to pick a mentor.
Mentor might seem a big, fancy word but it can be anyone you see with healthy and smart financial habits. This can be your friend, sibling, relative, and even a parent. You just have to be observant enough to choose the right one. This will help you discuss your finances openly with them and get life-saving advices and tricks to save money. You will look up to them and put in extra efforts to live up to the expectations of your financial mentor. So pick one wisely, but always keep your eyes open for fraud and never trust someone entirely with your finances. Use your own mind as well. Briefly, all the aforementioned suggestions are directed to help you manage your finances effectively. You need to be really sure of your short-term and long-term plans and must be aware of the opportunity cost associated with each one so as to prioritize which ones to go for and when to go for them. These recommendations will put your numbers in order and will help you make financially literate decisions without stressing too much about the money problem.