5 BEST WAYS TO MANAGE PERSONAL FINANCES
The problem of unreasonable spending is now quite common specially for young people and most of it comes from personal habits. Here are five ways to manage personal finances to help you make a reasonable spending decision to achieve financial freedom for yourself and your family.
5 BEST WAYS TO MANAGE PERSONAL FINANCES
1. Manage personal finances by spending less than you can afford
Reduce your spending ability a little less than it actually is. Change your lifestyle to suit your goals. This is really the key in better personal financial management.
There are many ways to live comfortably without spending your last money amount. But not everyone knows them.
5 best ways to manage personal finances / ph: pexels
You can adjust unnecessary spending towards more savings when you have good habits. These savings will spend for later bigger goals like buying a home for yourself or traveling.
Take control of your spending on a mobile app or a small notebook and strive for achieving the set goals.
Look for suitable items instead of valuable items and satisfy your ego needs.
2. Manage personal finances through budget setting
People often think that budgeting with an excessively saving regime, sacrificing short-term comforts and denying own pleasures not only is this not good, on the contrary, it can also have bad consequences that make you decide to waste it all in just one night. Instead, set a balanced budget like you follow a healthy and balanced diet.
Personal financial management should become a habit, not an instant solution.
Establishing a safe and solid budget from day to month will keep you in good financial health.
Here are 3 types of budgets can help you deal with money disorders:
- Low budget
When you make less money or need to save up for something special like a house or a new car,..
- Average budget
Your money you earn is just enough for living costs.
- High budget
When you have extra money amounts.
Choosing the right type of budget determines your spending for that month.
3. Manage personal finances through priority choices in spending
- Choose the items or things that you think are really important before spending.
- Make sure you have a plan and this is the most important priority
- Make sure your long-term goals don't affect your short-term spending needs much
- Choose products and services with long-term using value and multi-use for cost optimization.
- Avoid buying short-term, cheap but poor quality items
- Create 2 accounts: one for necessary living expenses and one for urgent spending. Thereby, you can manage your personal finances more easily.
4. Manage personal finances by smart savings
- Set financial goals in a specific context to know how much to save and for how long
- Set a motivating goal and commit to it
- Try to pay off personal debts and bank debts
- Each month, set aside your savings first, then spend the rest and don't use your savings. If 20% is too much, try starting with 10% or at least 5%.
This will help you create a habit of saving and creating your own fund.
- You can split all your money into 2 parts:
The first part is for the need to pay for essential things on daily living. The second part is for savings, you can take it to the bank.
5. Manage personal finances by 6 financial jars method
The 6 financial jars method is a pretty simple way that everyone can apply to better manage personal finances.
- The 1st financial jar (55%): For essential spending needs
This jar spends for necessary living expenses as foods, paying electricity bills, water bills, etc.
- The 2nd financial jar (10%): Saving for long-term goals
This is an investment that needs to be fixed for the purpose of buying your own home, car, or invest in your business.
- The 3rd financial jar (10%): Education and training
Use 10% of income for the purpose of learning and developing yourself
- The 4th financial jar (10%): Entertainments
This 10% of your income is spent for entertainment and leisure purposes which will help you create more energy and be more productive at work.
- The 5th financial jar (10%): Financial Freedom Fund
This fund is for investment purposes that generate profits as financial investment, real estate,..
Financial freedom is even more improved when you invest effectively and generate a lot of profits.
- The 6th financial jar (5%): Charities & giving
Show your gratitude, life is sharing and giving to receive more values. You will get a lot of joy and happiness when you share and give or grant charities.
5 BEST WAYS TO MANAGE PERSONAL FINANCES
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