As humans, we are prone to forgetting things, and we are a bit lazy when it comes to things like paying bills and taxes. So, understand your expenses and manage that properly to be an expert in handling finance. Write down a list of all the expenses you expect to have during a month. This list could include fixed/mandatory costs that you pay the same amount for each time. Include items like mortgage or rent payments, internet bills, electricity bills, car payments, etc.
4.Track your income
First, we have to understand how much we earn each month and the income trends that increase, decrease, or stay plateau. After getting that data, we can create a plan and goal for the upcoming months. Creating an income goal really helps keep track of all the income appropriately, and you can make a strategy for the forthcoming months in which area you have to focus on elevating the income from that very source.
If your income is in the form of a regular paycheck where taxes are automatically deducted, then using the net income (or take-home pay) amount is fine. If you are self-employed or have outside sources of income, include those as well. Record this total income as a monthly amount. Consider using your lowest-earning month income in the past year as your baseline income when you set up your budget if you have a seasonal or freelance job.
5. Analyze the current financial status
Before you begin to analyze, collect all your financial statements, such as bank statements, investment accounts, utility bills, etc. You will need to access every piece of information about your income and expenses. One of the keys to analyzing the financial situation is to create a monthly average income. The more accurate information you can gather, the better. When you keep track of your expenses and understand the income stream, you automatically analyze the current financial situation. However, every month you must sit with the month’s report and analyze your performance. By doing this, you can get a clear vision of your goals and if you need to fix things here and there. A software like CloudOnex business suite comes in handy doing it.
6. Avoid Debt
Try to minimize your liabilities and increase your asset. This idea is popularly coined by Robert Kiyosaki, the author of rich dad and poor dad. The book is fantastic if you want to understand how money works and why rich people get richer. We highly suggest reading this book as it will open your eyes to so many things regarding personal finance. So, clear your debts and get rid of those interest liabilities as much as possible.
7. Let your money work for you
Understand the power of investment. Don’t work for money; make your money work for you. Invest in the places you know well. Don’t buy a stock only because your friend got a great return on that investment. It is easy to get influenced by so-called friends to buy stock in places you do not want. Being able to say NO is very important. So study and look for patterns when you invest in big companies. When you have just started getting control over your finance, then go for a safer investment. You should also invest in your own business to grow and expand, and you are the best person who knows you better. You know you can do better. It’s just that you need to invite some discipline into your life. It is okay to make some mistakes. If we gain knowledge from those mistakes, then it is worth it. We should not make the same mistake again and again.
8. Maintain an emergency fund.
We often bump into an emergency such as car repair fees, quick doctor visits, and helping relatives. Therefore, if we keep an emergency fund, it would not affect our savings. That way, we can have better control over our finances.
9. Celebrate your progress
We are often so hard on ourselves when we try to achieve any goal. Therefore it is essential to reward ourselves when we accomplish anything, be it small or big. Every success needs to be celebrated to get even better in reaching goals.
In conclusion, it might be difficult for you to planning ahead, but it is essential to make these habits part of your daily routine. The more you practice this, the better off your finances will be. Try to read more about financial literacy. The more you know, the more you earn.