Personal finance is the process of planning for your money. It involves activities that help you optimize your earnings and limit your expenses.
Personal finance management is related to your overall well-being because money is an integral part of our daily lives.
A healthy lifestyle starts with healthy finances. The way you manage your money has a direct impact on your mental state, which can affect your health.
To maintain a stable state of mind, you must get a grip on your finances. It is not necessarily about how much you earn, rather, how you utilize what you earn.
Here are some tips to help you manage your finances more efficiently:
- Create a budget
A budget is an essential tool that will help you live within your means. Don’t think of it as limiting, don’t think of it as a chore. Having a positive mindset towards your budget will help you stick to it. You don’t have to be a finance guru before you can create a budget. You can start by writing out your income on one side of a sheet of paper, write out your expenses on another side. Then, prioritize these expenses according to need. Try to eliminate non-essential expenses. It may take a while, it will require some discipline but you will get the hang of it.
- Diversify your income streams
Having multiple streams of income will increase your earnings. You could do this by adding a side hustle to your day job, if your schedule permits. You could get invested in passive income streams like an active investment portfolio. An active investment portfolio that is managed by a professional will give you time to do other things while also paying you steady income (returns) on your investments.
- Build an emergency fund
An emergency fund just as the name implies is money (cash) that you save up for unforeseen circumstances. Life happens right, and sometimes we have no control over it. But having the foresight to shore up funds for emergency situations will protect you during those “rainy days”.
Try to save between 3 to 6 months worth of living expenses. This should be in a cash-only account, where you can easily access it when the need arises. You can lock it up in a high-yield savings account where you can earn periodic interest payments on your savings.
- Track your expenses
The easiest way to stay on top of your finances is to ensure that you do not spend more than you earn. Sounds simple enough right? But, if you do not track what is going out then how can you even be sure of how much you’re spending. Try this quick tip: at the end of every week, have a money date with yourself. You take into account all expenses that you made during the week. Write them all out, no matter how little. This will give you an idea of what you are spending on, and also shed light on areas you need adjustments.
- Automate your savings
Do not wait to save what is left from spending, spend what is left after saving. If you want a healthy financial life, it is important that you master the habit of putting away a minimum amount of money that you earn. You can arrange with your account manager to have your savings automated. That way, you will not be tempted to prioritize another thing for your financial well-being.
- Plan for the future
Plan for your future, save for retirement. It is very easy to put off saving for retirement because you think you have all the time in the world. Sadly, the years creep up on you and before you know it, retirement is staring you in the face. Imagine when you cannot afford to enjoy your old age because you did not plan for it.
Take the time to speak with a professional today. Save for your retirement. Update your will. You do not want to have to keep working after 65 when you should be resting.
Did you find these tips helpful? Share the link with your friends and loved ones. If you want to get started on your financial journey today, feel free to contact us. A healthy financial future awaits you