Handling your own finances is one of the most crucial skills you need to master to become a real adult. And finance management isn’t just about thoughtfully setting up your monthly budget. A proper approach to personal finance management will allow you not only to save money or pay off your debts but will also help you start investing responsibly or even get ahead with estate planning.
Below, you will find our brief guide to personal finance management which includes all the basic steps that will help you put your money in order. Apart from developing a budget and automating your savings, other financial planning strategies include creating an emergency fund, paying off student loans, and monitoring your credit score. Continue reading to learn more about becoming financially literate and managing your money wisely.
Set Up a Budget
It may sound complicated, but setting up a budget is the best way to control your expenses and start saving money. All you need to do is make a plan, including how much you spend on essentials and can afford to spend on non-essentials (such as gym membership, Netflix subscription, or money spent on Australian online casinos) to be able to regularly set aside even a small sum.
You should start with the non-negotiable necessities, such as rent or your required medications. Then, move on to other essentials. For example, your monthly food budget should include all the grocery shopping expenses (but eating out should be listed as non-essential), while your clothing budget refers to the necessary seasonal clothes or shoes and then not-so-necessary but desired pieces.
You can set up a simple spreadsheet in Microsoft Excel or use online tools like Mint and YNAB. The latter focuses on helping you save for the future and cut down on unnecessary spending habits. Try them out and combine their features with the knowledge from our budgeting guide to get the most out of them.
Automate Your Savings
Once you have a clear idea of how much money you can spend on a regular basis, it’s time to automate your savings to later start building an emergency fund. This will help you stay in control of your finances and always have some money for urgent expenses or emergencies.
For example, you can set up a savings account with automatic transfers from your regular account, ideally a few days after payday. That way, you won’t be tempted to spend your money in the meantime, and you’ll learn the discipline of saving for the future. You will save money without even noticing it and will soon have enough funds for a rainy day. The good news …….