Steps To Getting Your Finances In Order

Managing money is one of the most vital things in life that many people never get to learn about. Funny enough, managing one’s finance is never part of the school curriculum. Little wonder many today (no matter how educated they are) still find it difficult cleaning up their finances. Several surveys have it that people in the US and all over the world are in some form of financial problems or the other.

finance in order

Now, you are reading this post for a reason or two which could range from any of the following:

  • Your finance is in a mess and you are looking for a way to put things straight.
  • You are just starting as a young professional and seeking information on having a fantastic financial plan.
  • Due to certain unpleasant turn of events like job loss, personal life changes, or some other changes you need help addressing your worrisome finance.

Whatever your reasons for reading this post, we are sure it will guide you on how to best order your finances so that you can live within your means. Young readers who are reading this should know that they are in the right place. It’s never too early to start reading about planning your money. Furthermore, if you are old and already in one financial mess or the other, it’s never too late to start either. Even if you have a sound financial life, there are lessons you can still draw from this post to add to your wealth of knowledge.

Start today to get a stable and perfect financial standing that would offer you peace of mind. Read on to get the guide to ordering and getting back your financial life.

Design A Good Budget For Yourself

budget well

The first step to having perfect finance is budgeting. A budget is the financial picture or estimate of inflows and outflows for a set period. A budget helps keep track of the destination of one’s money and where it should head to. A budget keeps one’s spending from going out of control.

Setting an effective budget rest on the wings of reality i.e. the budget must be realistic. For example, if you are food tolerant, the kind of food you eat must be built into your budget. Do not create a budget that is unrealistic for you to follow. Try not to deprive yourself of basic things to keep a budget just align it with your spending. There are different apps out there that can help you with your budget e.g. Simple Budget, EasyBudget, Monthly Budget Planner, etc.

See: Best Free Accounting Apps here

Carryout An Extensive Research

extensive research

Knowledge, they say is power. Managing money as earlier said, is never taught in school, yet that does not mean it cannot be taught at all. There is so much information today to help people learn about financial management. Research about dealing with your debt and managing expenses to avoid falling into a financial quagmire.

Get books that address the topic. Download Apps or check financial sites that will help you achieve your financial goals such include Mint, YNAB, etc.

Earn more, save more and save before spending

As you strive to earn more money, do not be tempted to make a list of new things to buy with the extra money. That mentality is not a good one, if you must come out of debt you need to do more. As you plan to increase your income by getting a side gig or a change of job, plan also to increase your savings and not your spending.

A wise man once said as income increases, expenses increase also to consume the new income. Break out of that circle of poverty by increasing your savings as you earn. Besides that, do save before you spend. If you spend first, there is the tendency of overspending without saving a dime. Furthermore, you can be aggressive towards your loan repayment by using up all the new increases to pay back the outstanding.

Breakaway from Becoming A Spendthrift

E-commerce is making many people spendthrifts by promising different daily promos. There are so many new items uploaded daily that catch one’s attention. If you allow yourself to be dragged into that sand trap, woe betides you. Avoid buying the latest gadgets, trending fashion accessories/wares, etc., these are avenues of making you spend unnecessarily.

Avoid the bandwagon effect in your buying behavior. Just because everybody is buying something doesn’t mean you too should. Maintain a clean financial slate, purchase only what is important buy only what you need and not what you want. Do not let the availability of credit cards push you into buying things without control. Reality will be dawn on you when you have to pay back because Credit is not free.

Know how you stand financially

Do a check of your financial standing every month. This will go a long way to direct your actions toward meeting up. Check how much is due from you as debt repayment or recurrent expenses. Your budget will get you the true picture of things here. If after checking you realize that you are not standing well, make some structural changes.

These changes could include getting a new gig, getting a raise or getting a better job with higher pay, or cutting expenses. The logic is a simple one, know where you are before jetting out to where you want to be.

Set Financial Targets For Yourself And Pursue It

Have you ever thought of why salesmen are given targets? Well, it’s simple, they are given targets so that that would guide or motivate them to bring in sales. A salesman without a target sells sparingly because nothing drives him. But with a target that salesman would comb every part of town or call every available contact to sell. Don’t just earn and spend money, set a financial target to achieve.

Acquiring your first car or your own house in five, six, or ten years is a good example of a target. With such a target, spending lavishly would be curtailed (if you are disciplined) and saving, activated. Setting a target or goal is a very vital part of tightening up your finance. Break such goals into short-term, medium, and long-term. Write the goals down or create a vision board and place it where you can easily see them.

Negotiate Before Reaching For Your Wallet

People that want to get their financial acts together must learn the fine art of negotiation. Negotiation happens in every facet of life e.g. politics, government, homes, schools, offices, etc. Negotiation will save you a great deal of cash in your daily financial dealings. When you are up to buy something or hiring someone for a task, ensure you do not just take their word for it. No, go the extra mile of negotiating the transaction with them and agreeing on a price.

Furthermore, if you are at the receiving end of a transaction, also negotiate for higher pay or benefit. With that, you build professional confidence and increase your earning. It pays to negotiate. A dollar shaved off or added to the initial price of a product or service is a dollar worth saving. Read a book about negotiation or watch a self-help video on the subject to teach learn how.

Pay For Everything With Cash

Develop a great habit or unlearn the bad money habits you currently possess – avoid credits. Pay cash for every purchase either e-cash or hard currency. If you have a credit card avoid the temptation of always using it so that its debt does not mount. However, if you don’t have one, do not rush to get it – trust us you are better off without it.

It’s extremely easy and convenient to pay with a credit card but the repayment is not a piece of cake. The repayment through futuristic does not come without added costs. Use your debit card often so that your creditworthiness stays clean. With a clean credit rating, during emergencies, you can easily access credits.

learn: How to prepare for a financial audit

Let Your Debt Be Your Priority

For those with loans against them, the way to tighten up financially is to make the loan a priority. There are different kinds of loans people take – student loans, payday loans, mortgage loans, car loans, etc. If you have a loan already hanging on your neck to come out of it here is what to do – make it a priority and ensure you do not default. When you default, your loan accumulates due to default charges.

One thing that you should know is that loan interest rates are way higher than interest rates on savings. As a result that, it is logical to pay a debt before saving. Make the regular repayment, save the rest, and do not let any repayment pass. Little by little with commitment, you will repay the loan fully.

Avoid Unnecessary Debts

After completing your loan repayment, it is time to take responsibility for your finances. This time try not to enter into another loan (especially avoidable ones). Avoidable debts are debts you could do without e.g. buying costly things on credit. There are good debts provided you can meet up with the repayment. Example of such is a mortgage loan, car loan, student loan, etc. These loans can be problematic if the repayment becomes unbearable, hence ensure you get such loans from a good source after careful research.

To avoid unnecessary debt, you can strategically cut down on your essential as well as and discretional spending. Essential expenses include such things that one needs to stay alive e.g. food, transport, clothing, shelter, utilities, etc. On the other hand, discretional expenses include things one wants rather than needs. Such things as entertainment, flashy clothes, trending products, flashy cars, etc.

To put some order around your finance, do your best to reduce what you spend on essential things. For instance, change where you shop for groceries, minimize your use of power to reduce utility bills, rather than taxis, take the public bus or train, buy good quality clothing rather than flashy/trending ones, and so on.

To help with discretionary spending, rather than going to the cinema, watch movies online or on cable. Minimize or cut holiday traveling unless you win an all-expense-paid-trip voucher. There are so many ways of enjoying discretional spending by paying little or nothing, exploit them. Furthermore, you can download Spendee, Spending Tracker, Monefy, etc. can help you with this.

Bottomline

Knowledge without practice equals to waste of time. Put action behind everything you have read here. Start ordering your finance today and your future self will thank you for that.

All the best!

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