If you want to teach financial discipline in yourself and save money, then keeping a personal budget is simply vital. It is not easy to switch to such meticulous accounting, so we have broken down the process into several steps.
Every company and every state has its own budget. Likewise, anyone should know how to manage their money and keep track of income and expenses for a month, a year or a long term.
Monitoring your personal budget helps you cut costs and get used to financial discipline. For example, make less emotional purchases, reduce the credit load. According to financial advisors, those who record expenses and income spend 5-30% less.
Set a right goal
Many secialists believe that when managing personal funds, you need to set goals for short, medium and long terms and formulate these goals specifically. Short-term goals are aimed at solving current financial problems. They are solved mainly by drawing up a family budget or a personal budget when there is no family. It is important to balance income and expenses.
Your personal budget should take into account not only your monthly needs, but also the goals for which you want to save. According to specialists, a clearly formulated goal will help to understand how to achieve it. So if you want to buy, for example, a car, specify the car brand, by what date you plan to buy it and at what price.
Many specialists write that you first need to write down assets and liabilities. The first category includes your property and savings: an apartment, a car, a summer residence, a bank deposit, securities. In the second, your financial obligations, that is, debts, loans, borrowings, etc.
Some assets can generate income, which must also be recorded. For example, if you rent out an apartment or receive payments on bonds and dividends on stocks. But they can also incur maintenance costs. In the case of liabilities, you need to decide how much you spend on them.
The next step is to fill out the table with monthly income and expenses. To do this, you can use special applications. Keeping such records will allow you to control the financial situation, change the amounts received under various items, predict future spending and plan your personal budget. To do this, you need to understand the cost structure.
The financial advisor pointed out that every day you need to write down everything you spend your money on. In addition, it is useful to introduce three categories of expenses – fixed, incidental, and emergency. According to their opinion, over time, you will come to a level of spending detail that is convenient for you. You need to work with the budget for a long time, and a separate accounting of all small expenses can discourage the desire to do this.
Find what you can save on
After you have written everything down and assigned to groups, draw up a budget for the necessary expenses and at the end of the month compare it with the actual expenses. Analyze the result and make changes to the budget for next month.
Thus, you will have the opportunity to save money. The consultant suggested buying clothes at seasonal sales, planning the purchase of tickets and gifts in advance, and not going to the grocery store hungry and without a shopping list as ways to reduce their expenses.
In addition, it is necessary to revise short-term and long-term budgets due to the unstable economic situation. The revised budget should be adhered to from 3 to 6 months.
Another financial consultant also proposes to revise the main items of expenditure during the crisis, but not to save on health, education and broadening your lnowledge. Such investment in oneself is part of the formula for a fulfilling and enjoying life.
If you are spending too much money on a specific category, you can allocate cash for it. For example, if you allocate the budget for clothes or other goods, charge your bank card a certain amount for a week or month that you can afford for this expense item. Once you have spent all the cash set aside for such purchases, stop and resist the temptation to spend whatever you have left.
Try to increase your income
Some of specialists also proposes to analyze income and assess its profitability. If expenses are close to or equal to income, then this situation needs to be corrected. You can get a raise to your salary, find a part-time job, refinance loans at a lower interest rate, get a bank card with cashback, interest on the balance and bonuses, replace financial instruments with more profitable ones with a lower commission, take advantage of tax deductions.
The main thing is to monitor the growth of equity capital. Every month you need to set aside part of your income. And here it is not the amount that is important, but the regularity.
Increasing income will help you achieve your financial goals painlessly. For example, you can freelance, convert your hobby into an additional source of income, and sell unnecessary items. The consultant believes that income protection can also be a source of profit. Having insured your life, you can provide yourself with money in case of unforeseen situations.
In addition, extra income can be generated by investments, which will increase your personal budget. Some of specialists believe that in a crisis, it is worth keeping a few basic rules. Be sure to diversify your investment portfolio, that is, buy various assets. These can be stocks, bonds, ETFs, mutual funds and others. In addition, distribute them by country, currency, and company. They advised not to keep more than 5% of the securities of one issuer in the portfolio.
The experts believe that you always need to have an alternative plan in case the market rises or falls. This method assumes that you will acquire stock gradually. You have allocated a certain amount for them, but you do not spend it right away, but buy stocks in small portions. This way you can track how their price changes.
If the price of the shares decreases during the next deal, then it will be possible to buy stocks at a lower price, the average purchase price of all shares will also be lower. In addition, this method allows you to stop on time and not lose all your money.
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