Don’t wait for next year to start paying attention to your finances – you should start managing them as soon as possible.
Personal financial management is not something that you can master overnight. It takes effective understanding on how to create a budget and stick to it, among other things. If you’re looking for the basic and most effective guidelines on financial management, here are your four top tips that can help you with your money matters:
First Tip: Make sure you get paid based on what you’re worth, and then spend less than what you earn.
To discover your Point A on your money management journey, start off by making sure you know the industry standards on how much your job is really worth: you can do this by conducting an evaluation of your skills, productivity, job tasks, contribution to the company, and the going rate, both inside and outside the company. Being underpaid even a few hundred dollars a year can have a significant cumulative effect over the course of your working life.
This seems like a no-brainer, but the concept of professional worth tends to be set aside due to various reasons – lack of confidence, feeling of desperation, or even guilt. This may seem basic to any professional, but it is a critical element to make sure you can actually get what you deserve.
Then again, no matter how much or how little you’re paid, you can never reach your financial goals if you spend more than you earn. Often, it’s easier to spend less than it is to earn more, and a little cost-cutting efforts in a number of areas can result in big savings. Start off small by choosing the cheaper options of what you usually buy. Keep in mind that it doesn’t always have to involve making big sacrifices just to create that balance.
Second Tip: Create a Budget Plan, and stick to it!
It doesn’t matter if you’re living paycheck to paycheck or earning six-figures a year, you need to know where your money is going if you want to have a handle on your finances. Unlike what most people believe, budgeting isn’t all about restricting what you spend money on and cutting out all the fun in your life. It is about understanding how much money you have and where it goes, then planning how to best allocate those funds.
The first step is to create a budget plan. What you do is to gather every financial statement you can, record all of your sources of income and create a list of monthly expenses. You also need to determine the fixed and variable expenses, total your monthly expenses, and finally make adjustments based on your needs and wants.
Now that you have a budget plan ready, make sure you’re going to stick to it. Of course, it’s not wrong to make adjustments when you’re just starting out, but be sure that you’re always on track with what’s really going on with your plan. Remember: numbers don’t lie.
Third Tip: Have a Savings Plan
You may have heard someone say, “Pay yourself first”. The chances that you’ll never have a healthy savings account are high if you prioritize paying off your other financial obligations before seeing what’s left over for saving.
Resolve to set aside a minimum of 5% to 10% of your salary for savings before you start paying your bills. Thanks to technology, there are many automated ways online for banks to save a certain part of your money to another savings account; use this to your advantage.
Fourth Tip: Maximize Your Employment Benefits
Employment benefits like flexible spending accounts, medical and dental insurance, etc., are worth more than their face value. Company benefits are part of the reason why employment rates are rising even in the midst of global financial problems. The sad part is that more often than not, these benefits are often unused by most employees.
Make sure you know what your job offers. Maximize your benefits and take advantage of the ones that can save you money. Without you knowing, you can reduce your daily expenses and other costs of living, especially when emergency situations call for it, such as medical bills or dental check-ups.