Having solid control of your finances is one of the most important things to living a stress free, stable and productive lifestyle. If you don't have your hands solidly on the reigns of your finances, it gets very difficult to drive and direct your life. Here are a few easy steps you can take to take control of your finances today.
Tracking and The Importance of Tracking
Knowing your numbers is the first step to controlling your numbers. If you don't have a solid grasp of your finances, it's impossible to even try to consciously drive your finances. If you have a regular job, tracking your income should be quite easy. Just look at your last two paychecks to see what your after tax earnings are. If you're self-employed, work in sales or have an irregular income source, you'll need to track your income a lot more carefully. Try to track your income when you actually do the work, rather than when you receive the money.
In other words, if you do six days of work worth R2,500 each day and get paid 2 weeks later, instead of recording R416,66 the day you receive it, just record R2,500 per day for each day you worked. This is called accrued accounting. Tracking your expenses is much more difficult and takes some getting used to. You'll need to get in the habit of tracking all your expenses the moment after you spend the money. Once you have both your expenses and income tracked, you'll have a solid picture of where you're at to work from.
Working Towards Your Financial Goals.
There are two main things to consider when you're working towards your financial goals: Reducing expenses and saving for retirement. Of course, for some people, financial goals can include increasing income, promotions or new business ventures as well. The most important thing to realize about working towards financial goals is that starting small is almost always better.
Instead of trying to save 20% of your paycheck right off the bat, start by just saving up 5%. Increase the amount as you get more comfortable with the amount you're taking out of your paycheck.If you're saving for retirement or a child's college fund, try to talk to at least one professional to help you come up with your best plan. There are numerous tax breaks you could use that you might not have been able to find on your own.
Instead of trying to save 20% of your paycheck right off the bat, start by just saving up 5%. Increase the amount as you get more comfortable with the amount you're taking out of your paycheck.If you're saving for retirement or a child's college fund, try to talk to at least one professional to help you come up with your best plan. There are numerous tax breaks you could use that you might not have been able to find on your own.
The best way to reduce your expenses is to do your budgeting in cash. Using credit cards allows you to spend money without really feeling the weight of the money you're spending. Cash makes it so you feel every dime you're spending. Budget however much money you want to spend for the day and only carry that much around you. Throughout the day, you'll be able to see how much over or under your budget you're running at any given time.
This uses the psychological weight of cold, hard cash against subconscious spending tendencies. Get used to using and budgeting in cash and you'll find it much easier to hit your expense targets. If you follow these easy steps to taking control of your finances, you'll very quickly find your savings increasing and your expenses decreasing. You'll know exactly how much you have at any given time and you'll be able to systematically work towards your goals.
Comments
Post a Comment