Have you ever experienced that moment during the month where you wonder where all your money went? Well, you aren’t alone. Many people spend hours online researching ways to cut costs and manage their money better. But one misconception many people have is that, for you to have financial freedom, you need to earn or have more money.
And, although having more money has its perks. The truth is, living well has a lot to do with your personal finance management and, of course, your relationship with money.
Because if you think about it, no matter how much you earn, you continuously splurge on items you don’t need. Be it on the food you bought to console yourself after a rough day, or an item you found online when you were just browsing (because, believe it or not, we’ve all been there). But, all that does for you; is take you one step further away from your financial goals. And, 2020 is all about reaching your goals.
Personalize your monthly budget
As surprising as it is, many people struggle to keep a budget because they feel like it's too hard, or they don’t have enough money. But, budgeting is a managerial tool that should always be used. Now, one of the reasons why so many people fail at budgeting is because they try to use other people’s budgets. Yes, it’s okay to look for budget inspiration through financial content on YouTube or read about it on a blog. Whether it is the zero-based budget, 50/30/20 budget or cash-only budget, you still need to make it your own so that it’s easier for you to stick to it. Who knows, maybe for your case you can follow and take budgeting tips from all these methods because remember there truly is no one size fits all budget.
Track your spending
Once you’ve gotten the hang on how to prepare a budget, you need to track your money. Knowing where all your money is going is key to ensuring you live within your means. And, at the end of the day, there is so much money coming in and going that it’s easy for you to lose track only to get a shock when you take a look at your bank balance.
Tracking your money will help you see:
● Where is your money going?
● How much is going where?
● Where you’re being irresponsible?
● Where you can adjust your budget and make changes?
When you’re simply swiping your card, it’s hard to see where your money is going and how fast you’re spending it. So, make a list of all your fixed expenses, your variable expenses, and the money you used during the month; whether it’s going out, buying clothes or food. Once you have written everything down, you’ll be able to see where you can chop and change. And, be aware of “wants” you try and classify as “needs” as they can add up. Once you track your expenses, don’t deprive yourself because you need to spend on what makes you happy, you just need to learn the balance.
Cut out any mindless spending
Going out every weekend, buying clothes and take-outs for work is fun, but it will drain your money faster. So, now’s the time to curb any expenses that don’t add value to your life, or help you become better with your money management. To cut back on meaningless spending, take a moment with yourself or partner and decide what you value, then put money towards that. And cut out the things you don’t necessarily enjoy.
For example, if you’re a makeup fanatic, it makes sense for you to want to purchase makeup. That doesn’t count as meaningless spending, but the gym membership you never use would count as meaningless spending. So, this task is not meant to deprive you but to bring you closer to the things you enjoy and make you happy.
But, remember that it still needs to fit into your budget.
Start an emergency fund
As we all know, life is unpredictable. You never know when you’ll lose your job, land in the hospital or need car repairs. Now unless you’ve won a large cash prize, you will need to save money to ensure you’re safe when there’s an emergency rather than swiping your credit card. Ideally, your emergency fund needs to at least cover three to six months worth of your monthly expenses. So, if you haven’t started saving now, now is the time to start your savings goals.
Be smart with your money
Being smart with your money will help you live comfortably within your means.
To be smart with your money, try the following:
● Always make a list when buying groceries and don’t be loyal to brands. If the supermarket brand is more affordable, then rather opt for that.
● Make your own lunch and coffee.
● Opt for free entertainment when you can.
● Keep a note of your account balance and how much money you have left.
● Review and reduce your debt.
● Start investing more.
Start being honest with yourself
At the end of the day, you’re the only one who truly knows what your financial situation is. And, just like creating a budget for yourself and your needs, you need to create an honest lifestyle for yourself. Being dishonest to yourself means; you have seen you’re in a financial mess, you have too many bills to pay and you are still dependent on your credit card. When you’re dishonest with yourself, you will never gain financial freedom because you’ll always find yourself in sticky situations that cost you money.
So, instead of comparing your life and trying to seem like you can afford everything, learn to say no. Be honest with yourself when you see you can’t afford to go out again for the month. This will help teach you how to have a better plan for your money and help you find ways to stretch your Rand.
Save up for big purchases
The moment you learn to save up for big purchases rather than swiping your credit card, the more money you will have. When you save up for that big TV or bed you’ve been eyeing, you already learn to stop being dependent on your credit card. You learn that it isn’t your money to spend and you’ll feel so much better knowing you have saved up for the purchase rather than adding additional debt. Lastly, remember if you can’t afford to pay for it in full, don’t pay for it with credit.
Try and boost your income revenue
Another way to live comfortably and within your means is by finding different income revenues. Unfortunately, jobs are scarce, and you may have trouble finding a job that’s going to offer you the numbers you need to maintain your lifestyle. So, an effective way of ensuring you have enough money is by having multiple sources of income. Whether it is blogging, YouTubing or working on the weekends, all your ‘side hustles’ can help you afford to live more freely. This does not; however, mean you can splurge. Your other revenues are put in place to help you save more, reduce your debt and make your financial burden easier.
Living within your means isn’t difficult. You just need to have a financial plan; know what your income and expenses are, save more, and live a happy and content life without spending money you don’t have (unless of course, you win it). When you follow the steps in the article you’re guaranteed to make better financial choices in 2020. Choices that your future self will thank you for.