|
|
Mom Life Features :  Back to Momlife |
|
| SIRCUIT® Skincare Finance and Investing Fashion and Style Taxes |
|
| Relationships Family Life Travel - Vacation Home and Garden |
|
| Finance and Investing |
|
Managing Finances Ideas |
|
We all may dream of being rich but very few of us realize just what a long-term effort this takes. To make and keep money, you have to handle money carefully-not just one week, one month or one year…It has to become a consistent practice.
You need not have earned a degree in economics or learnt accountancy in order to make smart choices and decisions about your finances. All it takes is self-awareness, prioritizing and discipline.
Here are three ways to help you take control of your finances, without letting it disrupt your comfortable lifestyle:
- Come up with a personal budget
If you’ve done it right, it can last you three/four years. First, you have to work out the bare minimum income you get with every pay from employers, family and investments (if any). This is to have a picture of how to get by in a worst-case scenario. When you’re counting, don’t round up to the higher value. i.e. If you earn $ 95 a day from renting out your apartment, count it as $ 90, rather than $ 100. Aiming low means that any overtime, full occupancy rates, shift allowances or other bonuses can be used to pay off existing debts faster and to save.
The next step is to calculate your expenses. The immediate goal of this exercise is to cope with the expenses every pay. Making a list of all expenses also gives you an idea of what is most important and what can be cut off altogether. It helps to prioritize the expenses, to avoid making a costly blunder.
- What expenses are repeated?
Make a note of recurrent expenses, like telephone bills, credit card bills, groceries, fuel, mortgage payments, rent, etc. If you can add up how much they are for the year, then divide by the number of pays you get each year to work out how much to put into a bill- savings account. In this manner, your bill savings cut down your interest charges down until the due date of the bill approaches and you have to pay the amount. It’s important to set aside at least 5% (10% will be ideal) of your earnings for a rainy day. You never know when unexpected illness, increased consumption, doubling of family members, taxes or sudden bursts of inflation may turn your budget upside down.
- Make the necessary changes
How convenient it is to continue subscriptions and bad habits, just because one is too lazy to change. And yet, such expenses turn out the biggest culprits of budget blow-outs. Collector’s items, fancy magazines, cable TV, junk food, alcohol, and cigarettes…Do you really need them? There is a fine line between wanting and needing. If such expenses are weighing you down, it’s time to scratch them off one by one.
Setting and reaching financial goals
Life is about setting and achieving goals but some do it better than others. You may be among the lucky people who never run out of money and who never have to worry about money. This doesn’t necessarily mean you’ve achieved your goals in terms of finances.
Setting financial goals is about the things you want to do with your money within a given period of time. It helps you to learn the value of money and also to spend and save in a manner that will allow you to achieve your goals. How rich you become is a result of your actions over a period of time. Your actions are a result of your thought processes and these in turn are influences by your beliefs. Typically, financial goals come in the form of a car, marriage, children’s education & travel, retirement & medical expenses.
These goals need to be categorized as follows:
- short term- from a few weeks to a maximum of few months (i.e. shopping, holiday)
- medium term- between 1 to 5 years (car)
- long term- ranging from 5 to about 10 years (children’s college education)
If you’ve already set up a personal budget plan, then the next task will be relatively easy for you. It’s important to track where your money flows. You will need to understand what kind of spender you are or where and how you spend money and how much is left at the end of each month from your earnings.
Have you set any financial goals for yourself lately? Then this is how to reach them:
- Keep the credit cards on a tight leash:
If you haven’t heard this before, you have not perfected the art of achieving financial goals. Though we say credit cards, we highly recommend maintaining one credit card, if you are not seriously handicapped in the process.
- Avoid expensive loans:
We all need a little help now and then but if a loan sounds too good to be true, then it probably is! Some tend to get carried away with the here and now and are slow to realize the damage inflicted by high interest loans. If you have taken out any such loans, make sure to pay them first when clearing off your debts. A goal must not give you tunnel vision; keep your eyes open to the bigger picture.
- Make it a family affair-
It pays to have your immediate family well aware of your financial goals, especially children. This way, kids will develop financial planning skills at an early age. The general excitement created by sharing your plans will be conducive towards accomplishing your goals.
|
|
|
|
| Featured Advertisers |
|
 |
|
|
