Saving and investing should be musts in your own DIY-bookkeeping (sans the formality, of course), much like the way shelling out for expenditures like bills, insurance, and personal tax service are fixed parts of your regular remuneration.
So, how can you finally commence your journey toward financial health?
Start Early
In fact, start now.
The reason why many find it difficult to pursue their seemingly far-fetched, visionary plans of budgeting and investing is that there’s always some excuse not to set them in motion TODAY.
What’s the easiest and most practical step to follow as verified by acclaimed financial experts? The moment you receive your salary and have it in the palm of your hands (or in your bank account), set aside the amount you’ve committed to saving for the month, the week, or whichever duration you’ve chosen for yourself.
Apart from this, here’s a crucial rule that should never be crossed: once your savings are reserved and stashed away, consider them untouchable. There’s no going back to them to pay for the unexpected expense that’s suddenly in your way.
Create a Budget and Track Your Expenses
Secondly, allocate designated amounts to your expenses. This includes monthly payables such as electric bills, rent, groceries, and gas. Furthermore, don’t forget to separate a budget for your personal tax services.
Just as essential to these financial must-dos is tracking your spendings. Another saving tip is to record them in an organized fashion. If you have an organizer handy, you’re in luck. Similarly, a spare notebook will work just fine. And if you’re more used to your phone’s organizing app, then try that as well.
The point of this task is for you to be familiarized with recording expenditures on a regular basis. This way, you can compare your spending habits daily, weekly, and monthly.
Have Short-Term and Long-Term Goals
What are you trying to get out of saving? Do you want to have an emergency fund? Is there something you want to save up for and purchase in the near future? These are helpful questions that will distinguish short-term from long-term goals.
These questions will not only serve as a blueprint for you to see where your money is going but also as enablers of motivation for saving.
Likewise, you might feel ready to consider making small investments in stocks, retirement plans, bonds, alternative investment funds, or other assets. Create an investment strategy, and if need be, seek counsel from a financial advisor to assist you in managing this area of your finances.
When seeking a long-term investment plan, finance specialists recommend that you should have at least 7 to 9 months of income worth of savings. Upon reaching that temporary “ceiling,” immediately place your money in a savings account, and take it out only when you’ve decided what investments you’d like to make.
Live Within Your Means
Finally, live within what the remainder of your salary can offer. Think of it as a budget exercise of being thrifty whenever possible. Instead of constantly purchasing things you don’t actually need (new shoes, gadgets, clothing, you name it), revisit your short-term and long-term goals and remember why you are frugal in the first place.
It’s true that once in a while, it’s important to treat oneself. So, go ahead, have dinner with the family someplace special or go on a well-needed vacation. However, set a limit as to the frequency of having these “special” expenses. Will it be once every two months? Every three?
According to Life Beyond Numbers, if you’re a budding entrepreneur, the same rules apply. Savings are savings, and so are personal tax services and investments. Once stored, they’re stored lock and key. Discipline your mind to automatically think in this manner!
And if what you have in your wallet won’t cut it, scrap any expenses altogether. Unless it’s a need, you can live without it!