How to Better Handle Your Money
Handling your own money is tricky business. That’s why money hacks and financial advisers have been getting a lot of followers: they’ve figured things out and are sharing the keys on how to manage our finances.
Out of all the advice that’s available out there, here are the four most important and sound tips to try in order to better handle your money. And while they seem to be commonplace and easy to follow, the challenge is really about being consistent and trying your best to follow through amidst all the spending temptations.
Track Your Spending
First on the list of wise money handling steps to take is write down the specifics of where your money goes. Make a list of what you need to spend on and how much. Prioritize utility bills such as rent, water, electricity, internet, and food. You will then be able to set up a budget and plan your spending on “others” based on what’s left of your money.
Once the basics are paid for, however, you shouldn’t just splurge with what’s leftover. If you find that you have extra money, you can and should set a savings goal. You can set two types, the short and long-term goal. A short-term goal could be an item you’ve been wanting to buy and a long-term goal could be for travel or an emergency fund.
However you want to do it, tracking your spending and setting up financial goals is the first step in practicing better money management.
Pay Yourself First
We’ve heard the line “pay yourself first”, given by financial advisers to effectively start a savings habit. The key is to set aside a certain amount for savings as soon as you receive your income.
It sounds easy, but it requires commitment. There will always be unforeseen spending and obligations. To start the habit, you can set a small amount for savings first, and gradually increase it during times when you don’t have a lot to spend on. This is why the 50-peso savings and 52-week savings challenges are so popular. It encourages a commitment to keep setting aside your spare money, with happy individuals reaping their rewards and huge savings by the end of the year. There are lots of detailed instructions on the internet, even weekly savings calendars you can follow.
If you’re ready to take on a bigger savings challenge, you can make your savings automatic. Use your bank’s mobile app to set an automatic money transfer to your savings account as soon as you get your salary. Do this right and you would even be surprised at how much money you’ve saved over time.
Have More Sources of Income
There are people who can’t quite get the hang of budgeting, no matter how much they try. The workaround for this is creating more sources of income to avoid going over budget.
Over time, having more streams of income – even if some are smaller then others — will give you a more solid foundation as you move towards financial freedom. It would also work great for people who are already good at budgeting because it will motivate them to save more money for the future.
Consolidate Your Finances
If you’re married or living with a partner, you can combine your finances and split the bills. You can set up a joint account to pay off all the monthly expenses. It also fosters good communication in your relationship, as you are both responsible for budgeting your income.
Written by Josh Cornehell, Analyst at eCompareMo.com. eCompareMo.com is the country’s leading and complete comparison portal intended for Filipinos, specializing in banking and insurance information.
