The first rule for anyone who wants to put (or keep) finances in order is to make personal financial control a habit. This means knowing exactly how much you earn and how much you spend and closely monitoring the budget over the month. Mission impossible?
Not anymore. Today there are a number of options for free personal financial control tools that make this process much easier. The GuildBayment one of them. Just enter your bank details and in less than two minutes all your expenses will be right in front of you, broken down by categories. Another option is to use a spend control sheet.
Whichever personal financial control tool you choose, the most important thing is to rearrange the way you manage your budget. See how:
With the help of a financial tracking tool, identify all your spending in the last month to understand where your money is going.
To find out what your budget’s main villain is, you need to segment it with the help of a rule we call 50-15-35 (want to know more about it):
They cover all the expenses necessary for you to keep up with your daily life: housing, transportation, health, food and education are examples that fall into this category. Ideally, essential spending should not exceed 50% of income.
If you are in debt, your financial priority should be to settle the debts. If not, your priority will be to save money for your medium and long term goals. The recommendation is that this category accounts for 15% of your income.
This category is the motivation to leave home every day to go to work. All spending related to leisure and hobbies goes here: gym, beauty salon, restaurants, nightclubs and shopping at the mall are examples. Ideally, spend up to 35% of income to maintain your lifestyle.
With your expenses mapped, you can already identify where you are spending more than you should. Now is the time to set goals for each of your spending so you can adjust your budget to the 50-15-35 rule.
You will probably need to cut expenses to balance your budget. Start with lifestyle spending, then look at financial priorities, and finally check essential spending.
It is much easier to put monthly spending goals into practice when you deploy them by week or by day. If you have a goal of spending $ 800 per month at the supermarket, for example, plan to spend $ 200 on your weekly purchases. If you want to spend $ 400 a month for lunch, set the goal of spending $ 20 a day.
Following the 50-15-35 rule, you will have 15% of your income earmarked for your financial priorities. The first step is to pay off your accumulated debts, but once you rearrange yourself financially, you will be able to Going to save money.
Monitor how much you can save over the next few months. Seeing the results of your personal financial control efforts is a great motivator to help you move forward and take on new goals.
The first financial goal for when you can start saving money is to build a three-wage emergency reserve to guard against life’s hardships.