Today, there are several personal finance tips that encourage you to manage your money efficiently.
There is no better time than right now to get your finances together. Include these financial habits to your routine and experience an organized personal finance management.
Open a savings account
As soon as you start working, open a bank account solely for your savings. Many financial experts suggest that you should at least allot 20% of your income to your savings. Do it on a regular basis and you will see that it will accumulate eventually.
Quick Tip: If you have any bonuses or overtime pay, put it directly in your savings account. Do not see these amounts as extra money to spend on your wants.
Set a budget
One of the important aspects of personal finance management is setting up your budget.
First thing you need to do is to determine your income. Then, list all your expenses for the whole month-utilities, groceries, transportation allowance, monthly amortization etc. These are your fixed expenses.
Then, list your variable expenses. This includes the budget for clothing, entertainment, and dining out.
Compare your expenses and income. Are you overspending? Is your income enough for all your expenses?
Keep track of all expenses
After setting your budget, keep a track of all your expenses. List down every purchase you made. It may sound tedious. But, this will help you monitor where your money goes. Plus, you can cut on the things that are not important and make way for the essential ones.
Quick tip: To make your tracking less tedious, use bank and budget apps so that everything is automated.
Start an emergency fund
Emergency fund refers to a fund set aside for emergency financial situations, such as illness, hospitalization, job loss, or major repair for your home.
Ideally, an emergency fund should contain 3 to 6 months of your month expenses.
Quick tip: Place your emergency fund in an accessible place so when you need it, you can get it right away.
Plan for retirement
Planning for your retirement may be too early for you to do. But, as early as now, retirement goals should be in your pipeline.
The earlier you start, the faster you will achieve your retirement goal. You do not need to provide a big chunk of your income to your retirement fund right away. You can start small. Several financial planners recommend allotting 10% to 15% of your income for retirement. This, however, will still depend on your monthly income. You can personalize based on your budget.
Set financial goals
Financial goals can be short or long term. Short term goals may include down payment for a car, dream vacation abroad, or starting up an emergency fund. Long term financial goals include purchase of your own home, college tuition for your kids, and retirement fund.
Setting these financial goals will enable you to see clearly where your money will go and assess where are you now in your goal.
These financial practices may look intimidating at first. But, with proper planning and discipline, you can integrate these habits to your financial planning effectively.