Dozens of very talented authors and scientists have already developed recommendations on how to manage your personal, family and business budget. But this issue still continues to be relevant. This is a situation like “everyone knows how, but almost no one does.”
Unfortunately, human nature is such that money has control over our will and emotions. There is even a phrase the essence of which is that the true essence of a person is revealed when he receives a lot of money at his disposal. But in this article we will not talk about wealth in terms of psychology, but about how to manage your budget correctly.
Describe your needs to the smallest detail
The first step to competent budget planning is to understand where your money goes. To do this, you need to describe in detail all your expenses in the period for the month. If we take the average person as an example, then this will be:
- food expenses
- transportation costs (gasoline for your car, taxi, or public transport)
- utility bills and communications costs.
Optionally, this list can be supplemented with the following items:
- education expenses
- expenses for the maintenance of children
- hobby expenses
- interest on a loan for a house or car
- parent support costs.
Find in this list items that maximally describe your needs and try to calculate how much you spend per month on each of the needs, with the possibility of an error of up to $50.
Next, compile a summary table, and as soon as your budget becomes clear, you will at least understand where you are constantly spending all your salaries, and as a maximum – you will be able to manage your money more wisely.
Draw the line between emotional buying and the real need
Please note that we did not include clothing, vacation and entertainment expenses in the list above. And we did it purposefully. Do you know why? Because in most cases, we make the above purchases very spontaneously. Perhaps only a vacation can still be the object of at least poor planning, and not even always. But in fact, this spontaneity creates huge holes in our budget, and then we can no longer understand where we spent so much money.
Marketers have already honed the skill of provoking the right emotions at the right time, and they are very cool in using our feelings of fear, dependence on social opinion, and the need for self-affirmation to make us buy. Remember this.
And so that spontaneous purchases do not bite off a huge piece of your budget, develop the right habits in yourself. For example, it’s wise enough to add new items to your wardrobe once a season, rather than every weekend. High-quality boots or a jacket can safely serve two or three seasons. Set aside five percent of your income each month to buy clothing and entertainment, and follow this rule from season to season.
Save at least 20% of revenue every month
You can even keep money under your mattress or in the garage, but most importantly – save it. Everyone has long been aware of this rule; it is as old as the world. It has been voiced millions of times by personal growth trainers, financial advisors, and ordinary people who have encountered unexpected difficulties and realized the value of savings.
Therefore, always, as soon as you receive a salary, a return of a debt, a commission from an affiliate program with LeadsMarket, save 20% of this amount in a safe place. And in the next paragraph, we will tell you how to dispose of the saved amount even more reasonably.
Do not keep your savings, but manage them wisely
This is a very popular tip that money needs to be invested. And this is a very correct approach. However, we will allow ourselves to bring a little clarity to this advice and give you practical recommendations on where you should definitely invest your saved money.
- the first – deposit in the bank
- the second – a retirement account
- third – an account for the education of children
- fourth – a travel account (optionally, if you want).
- fifth – leave some cash in order to be able to quickly cover unexpected expenses (for example, a disease that is not covered by your insurance, or a car breakdown).
You can reasonably answer that this is a kind of “passive savings” that do not give you additional income, perhaps except for a bank deposit. And you will be right. However, it is necessary to make savings in this way precisely from the standpoint of life realities. Sometime your children will want to go to college, and you will retire. And it will be cool if your children can pay for their studies on their own, and you will receive support from the state. But think, what will happen if the situation turns around differently?
Use modern technology
Applications for financial control and reporting are a real lifejacket for those who still can not cope with their finances on their own. This application will help you establish clear control over each of your purchases. Their functional range is actually wide – financial applications can be integrated with your card, they can make reports and develop financial recommendations, send you notifications if you have crossed the limit for a certain category of expenses, and can be used by all family members to keep track on a common budget.
Conclusion
And finally, the core of a viable budget is the principle of “profitable does not mean cheap.” In this context, learn to shop profitably, not cheaply. This will allow you to purchase the necessary quality products at a bargain price. Try not to pay for the brand, but for the quality. We are all familiar with this famous saying: “I’m not rich enough to buy cheap things.” You need to put this into practice. Choose for yourself really useful services that solve your problem, such as airport parking discounts if your staff a frequent flyers. Optimize, do not chase cheapness.
If you plan all purchases in advance, while focusing on all kinds of promotions or discounts, and also know where you can buy QUALITY products or services for less, you will learn how to rationally use your money and manage it.
