Our financial responsibilities increase as we age. Suddenly we have utilities to pay for, children’s school tuition to save for, home and car payments to think of, and credit card bills to settle. Aside from these, we also need to set aside money we can use for sudden expenses such as house repairs, family sickness, and so forth. To help you manage your finances, here are some actionable tips in budgeting ideal for the average person:
Make sure to check your receipts with every transaction or purchase you make. Save all your invoices and billing proofs and check your bank account and credit card statements for any errors. If possible, activate your account online so you can check it easily. Keeping track of your transactions will enable you to be more conscious of every money spent, and push you to become more frugal with your spending habits.
Opt for less whenever you can.
Good budgeting means you should value every penny. Opt to be more economical by changing your lifestyle habit to maximise your budget. For instance, opt not to have add-on syrup shots for your coffee. You can also stop upgrading the size of your drinks or fries when you eat out, or refuse to buy a soda altogether and choose to drink water instead.
Check all your subscriptions and scrap out those you don’t use.
Make a list of all your monthly and yearly subscriptions, and how much you pay for each every month, then assess if you really use it or if the service is important to you—it can be anything from your magazine subscriptions to cable TV to all other subscriptions you’re paying monthly fees for when you’re not even browsing these magazines or you spend most of your time outside rather than at home watching TV.
Spend less than what you earn.
Some people who are self-confessed big spenders motivate themselves to earn more by taking on side jobs and establishing a business in order to keep up with their spending habits. However, if you don’t see yourself earning money apart from the job you currently hold, then control your finances by spending less than what you earn. Manage this by following the formula: income – savings = expenses, and watch how your savings grow in a couple of months’ time when you stick to that formula.
Weigh out the value of each purchase.
Another tip for budgeting your money properly is to consider the value of each item you’re about to purchase before you get it. How long will the item last, for instance? In general, purchase items that will still be valuable and useful after 6 months of use or longer. This doesn’t apply to your food, of course.
Invest your money.
You may spend time setting aside money and saving, but unless you sock away your money in an investment, you won’t see your funds grow huge profits. To get returns and profits from your savings, try investing your money in shares so you may get 50-100% compounded interest. The benefit of compounded interest in investments is that the longer you keep your funds without touching it, the bigger your money grows, as opposed to saving your money in a bank account or a piggy bank where your money does nothing, or in the case of a savings account, it can only provide you with 1 to 2% interest rate. However, you should also keep in mind those bigger investments also mean pose bigger risks for you.
Practice proper use of credit cards.
Finally, a good way to budget your finances well is by practicing proper use of your credit cards. This means you should use your credit cards only when absolutely necessary and don’t use it just because you feel too tired to go around the block to withdraw cash from your ATM. Neither should you use your credit card just to collect reward points, as collecting points can turn out to be even more costly than if you just pay for the freebie yourself. You should also ensure that your monthly dues are paid every month so you won’t need to pay additional fees that could eat away at your budget if neglected.
Make sure to use one of these budget tips every day to significantly reduce all your debt. This way, you could start your way towards financial freedom just in time for the Chinese New Year!