A Five Step Plan In Managing Your Personal Finance

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A Five Step Plan In Managing Your Personal Finance

Why is it important for us as individuals to be aware of our personal finance? Why should we make an effort to educate ourselves on how to manage our own money? Believe it or not, many of us, are falling prey to it. As the saying goes, “Money is the root of all evil”, or in some cases, the cause of all problems.

Nobody wants that right? This is why it is so important to start gaining control of your life. It’s never too late to learn. Knowing how to manage your finances can bring you wonders, but first, you must have the right attitude if you really want to save yourself from future stress and money related issues.

Don’t where to start? Here are a few easy steps to get you started.

  1. Make a budget plan – Sounds simple I know but a lot of people fail to follow this simple rule. Write down your basic expenses, be honest with yourself and don’t include unnecessary items. This way, you’ll be able to determine if you are actually spending more that you are supposed to. Check your cash flow. You might be surprised if you find out that your expenses are way above your monthly paycheck.
  2. Put away a percentage of your salary – After listing down your expenses, you can now set aside a percentage of your monthly income. The amount will actually depend on your salary vs. expenses. It may be small but make it a habit to save part of your salary. Save it for a rainy day. Believe me, you’re future self will thank you for it.
  3. Downsize – You are probably cringing right now. Think of it this way, every time you buy something, think twice. Do you really need it? If you feel you can live without it, then put the item back down, slowly turn away and head towards the exit. Downsizing may not sound fun but think of all the money you can actually save from not buying unnecessary stuff.
  4. Set a goal – Having a goal is a great way to motivate yourself to save money. Whether it’s as small as saving up for a treat or better yet, mapping out your retirement plan, see to it that you actually have a plan. By writing this down you’ll be able to see the bigger picture clearly. A step by step guide can help you determine how you can actually achieve your goal.
  5. Invest – Now that you have extra money in your pocket, think about growing your money. Do some research on what type of investment will suit you best. You can try stocks, bonds, mutual funds or whatever you are comfortable with. This is the best time to grow your money at hand.

These are simple rules to follow. Easier said than done but definitely worth the try. Don’t let money run your life. By learning how to manage it, you can gain control over your finances. If you feel you want to get more serious about handling your finances then perhaps you can consider seeking professional advice. By following these steps, you are definitely one step closer to financial freedom.

Don’t just work for the money, let the money work for you.

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