Managing finances is in itself an art. Many people who earn good amounts often fail at managing the money and are left with empty pockets by the last week of the month eagerly wait for their next salary. Though increasing income is not easier than said, with simple effective practices one can successfully manage their finances at home.
Here is a compilation of tested and proven tips that are easier to practice to effectively manage your finances.
Identify Money Leaks
Small aspects such as TV and magazine subscriptions, frequent plumbing repairs, excessive shopping, too much partying and spending on friends can cause money leaks without our knowledge. By the time we realize, the money is already gone and we are left with nothing that can be done.
Pro Tip:
Write down every expenditure that you make. Review the list weekly. This helps you to stay alert and cut down on similar upcoming expenses.
Beware of little expenses; a small leak can sink a great ship. – Benjamin Franklin
Opt for Home Food
With the increasing convenience of food delivery through apps, no wonder that we all are preferring to order food and skip cooking at home. While this can be good sometimes to relax ourselves, depending too much on outside food will affect our finances heavily. Besides, restaurant food is rich in oils, salt, and sugar that can impact our health too in the long run.
Pro Tip
Cook at home whenever possible. If you are working and have little time to cook, plan cooking for the week ahead, stock your fridge with concerned ingredients and stick a note with your cooking schedule on the fridge. Opt for single pot recipes when you run of time. Keep eggs, oats, fruits, nuts and dry fruits ready which come handy when you are left with little time and energy to cook.
Review your Weekend Plans
Weekend plans are another source that leads to huge expenditures. Long drives and fun activities can be fun once in a while, but not multiple times in a month. We end up spending a lot of fuel for the car, eating out and staying in hotels, etc.
Pro Tip
Call your friends and family for the weekend to your place once in a while. Share the cooking part, enjoy the fun and spend the evening playing indoor games or spending time at your pool. You can also relax on your weekend completely at your home watching movies on TV, working out for an hour more, enjoying a nice bubble bath, or simply losing yourself into a book with a cup of coffee.
Make Gardening Your Friend
Gardening is one such hobby that has multiple advantages. You can grow your own vegetables, fruits, and herbs and enjoy homegrown organic food, instead of shelling out dollars on organic food from supermarkets. Gardening also offers comprehensive work out without needing to invest in high-cost exercise equipment. Thus, gardening can make you healthy and wealthy at the same time.
Pro Tip
Encourage your family members too to involve in gardening. This builds good family bonds and also teaches your children the joy and pride in growing their own food.
Save Before you Spend
A common mistake that many of us do is staying in a notion to save whatever is left after our expenditures are made. This is the wrong way of managing your finances. Financial experts opine that your management of savings should be according to the formula: 50-30-20, which means you should spend 50% of your earnings on your basic needs such as food, education, shelter and health, 30% on wants which include your internet connection, car gas expenses, and 20% should definitely go into your savings.
Pro Tip
Never touch the savings amount unless there is a critical emergency. After you save enough amount, try to make the money work you by taking the help of a financial expert.
An Ultimate Approach for Managing Finances
Check where your hard-earned money is going waste, and stop the spending without any further thinking. Sometimes, it is good to be strict, especially in curbing extra expenses.
Do not save what is left after spending, but spend what is left after saving. – Warren Buffet
When both wife and husband are earning, it is important that you both are on a single page about investments, expenditures, and spending on luxuries. In situations like the selection of schools, shopping, planning for vacation or luxury purchases, both of you should discuss and make a proper plan about finances. EMIs and interests consume a major chunk of earnings and hence you should have a solid plan to deal with them effectively. Incorporate all such expenditures in your budget planning.
Spending on health and healthy food is always an investment and should never be ignored. Insurances can save you from major financial windfalls and you should take insurances for all your needs.
When it comes to savings and investment, remember that you can even start your savings with a couple of dollars. The earlier it is, the better – when it comes to managing your finances and savings. Never postpone your plans of savings and start early even if the amount of savings is little. Take expert help when in confusion and this pay well in the long run.