8 things you need to know when you are you struggling to track each penny that you spend every month or yearly? You don’t have to be an expert in the personal finance or have a big investment portfolio to be financially secure. It’s important to understand that being financially accountable is essential for your health and financial life.
However, for most of us, it’s easier said than done. Many individuals lack strategies on how to manage their income. To be financially accountable, you must understand the basics of financial planning. If you have been facing difficulties with planning your finances, worry no more, because I have a solution for you.
I have prepared 8 ways to be strategic with your hard-earned money.
Let’s now dive in!
Live within your means
To “live within your means” simply means to spend less than you earn. It’s necessary to understand things you need that, they are various factors involved in each individual’s unique financial situation, which impact their ability to live within their means.
Resist comparing your life with your friends or people who are around you. You may be forced to use credit loans in the name of competing with your friends, but you all pay for it later and you will end up paying more since interest is added to your balance each month.
Live a life that you can afford. Having said that, regardless of whether you are just starting, or you’re at the peak of your occupation, living within your means is always a goal to endeavour for. If you want to leave in your means, you have to know what your means are. Know how much you earn every month and focus on how to reduce your expenses to fit your income.
Budget for your holidays and celebrations
The holiday season is one of the giving, which often means it is also the season of spending. Without budgeting for your holidays and celebration, you can end up, overspending a lot of money that you had not planned for and with debts. Here are 7 ways that are going to help you avoid overspending your money during holidays or celebrations.
- Create a budget and stick to it.
- Make a spending plan for your holiday. List all things that you need to purchase
- Decide on the spending limit of your holiday. Don’t plan to spend more than you have saved for your holiday or celebration.
- If you are traveling outside your country buy your ticket in advance because it will be cheaper.
- Travel during the off-season.
- Explore multiple lodging options to help you get a less expensive one. I understand that we all desire to stay in luxury hotels, but why choose an expensive one that is over your budget?
- Travel with your friends for group-booking discounts
Have a spending plan
Having a spending plan is a very important financial management skill. It’s always advisable to start planning for your spending with the small income that you have so that you can have a solid financial discipline in the future. If you are wondering how you can start planning your spending, here are the basics of a beginner;
- List your monthly income.
- List your all fixed expenses. Fixed expenses are the ones that are predictable and don’t change over a short period of time. They include; house rent, mortgage payments, and mobile loans.
- List all your variable expenses such as transport, bills, and food.
- Set short-term and long-term goals.
Keep house payments affordable
House payments are generally the most important part of everyone’s budget. The search for a good home can simply extend your spending plan beyond what affordable. The smartest move you can make before you buy a home is to establish your limit on your monthly housing payment.
Make sure that you have spent only 28% of your monthly income on house payments and only 36% on your mortgage. How to determine how much house you can afford;
Check on your credit card score, if the score is high then you likely to get a mortgage to pay your rent or buy a house.
- Income- is the most obvious factor in how much you can pay your rent.
- Down payment-the bigger your down payment is the more house you can afford.
Cut down on food and entertainment expenses
Entertainment and food expenses are some of the holdbacks things you need that people make when trying to save money. Cutting back your entertainment and food expenses can help you reach your financial goals .it is very difficult to stay without food and something that can entertain you.
If you want to cut down your food and have fun, but are wondering for ways to reduce expenses, here are several ways to decrease your entertainment and food expenses.
- Make simple meals that you like and limit your alcohol
- Grocery shop 3 times per month and stick to your list
- Try changing up what you do for fun with cheaper expenses
- Cook from scratch
- Carry lunch while going to work.
Manage service providers
Managing your services can help you not to overspend a lot of money. If you are struggling with how to save money with your service providers, here are tips that can help you
- Compare deals in your area to see if you can save money.
- Check that you are not paying what you need.
- Contact your current provider and bargain for a better deal.
- Bundle together your broadband, TV package, and home phone for cheaper expenses.
Use credit responsibly
Learn how to use credit in the right way to build and preserve a superior credit score. Maybe you have learnt through the hard way about the effect of credit misuse, but it’s never too late to start over.
If you haven’t started building your credit, taking to learn good habits now will give you a financial advantage that you can benefit from throughout your life. Making some small monthly payment and frequent bill payment will help you to stay below the limit of your credit.
Manage transportation costs
Many reasons can contribute to why your transportation logistics cost are so high. For instance, poor management and a bad decision can lead to an increase in overall transportation costs. So, what should you do to manage your transportation costs? Well here are five important things you should consider going.
- Provide your drivers with well-optimized routes.
- Walk on automobile trips.
- Use public transportation means.
- Monitor your drivers
- Ensure regularly that your vehicle is maintained