Managing your finances can be tricky, time consuming and often really frustrating, but are there any right and wrong ways to go about managing your money?
Everyone should deal with their finances in a way that they feel comfortable, but managing your money effectively does require an element of organisation and know-how.
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Always keep a budget
A budget can be one of the most effective financial tools, and they are very simple to do. The easiest way to create a budget is to use a spreadsheet application so that you can quickly carry out any calculations that you need and it eliminates the margin for human error.
What information do you need?
To start off your budget you need two sets of information, your income and your expenditure and both should be pretty easy to get.
The easiest way to gather this information is to compile at least three months worth of your bank statements, you should easily be able to see how much money you have made each month and how much money you have spent.
To work out your budget all you need to do is minus your expenditure from your income, this will leave you with the amount of flexible cash that you have available to you.
Keeping a budget as a money monitoring tool will allow you to notice where you are spending too much money so that you can cut back accordingly, you will also be able to notice any trends that may need addressing.
Always have an objective
To manage your money effectively you must have an overall objective of what you want to achieve financially. You should have an end goal that is split up by smaller objectives.
Whether you want to save up to be able to invest in property or a new car it doesn’t really matter as it’s the smaller steps that will probably prove to be the more important.
Smaller steps could include things like spending less on your weekly food shop, or cutting down your monthly phone bill, every little step you make will help.
Make your money work for you
It’s pretty pointless to manage your money effectively if you are just letting your money go to waste. Make your money work for you by putting it to good use.
If you are planning to save for something special then think about putting your money into a high interest bank account and reap the rewards.
Or if you’re planning to reduce your debt, then allocate a set amount of money each month to paying off any credit card debt that you have.
