Thinking of taking up college courses but worried about the cost of education? I’d like to share with you this infographic from Southern New Hampshire University. Hope you find it useful and enlightening. [Read more…]
Here are some surefire ways on how to effectively manage your finances:
1. Create a simple and flexible budget.
The first step in managing your finances is to create a budget that will serve as your financial roadmap. Creating a budget will not only provide you with a clear idea of how much you are actually spending, it also helps you make a plan on how you can pay for all your expenses without incurring debt. In creating a budget, remember to make it simple and flexible, so it is easier to follow. On the other hand, you also need to ensure that it is flexible so you will not find it too difficult to adapt to small changes.
2. Categorize needs and wants.
To be able to balance your needs and wants, it is essential to distinguish which items classify as needs and which are wants. This is rather simple: needs are the things you should pay for, no matter what happens. They are necessities for your everyday living. These include food, shelter, utilities, transportation fees, and insurance. Meanwhile, wants are all the other things that do not qualify as needs: restaurant meals, concert tickets, movie tickets, cable television subscription, clothing apart from essential wear, accessories, and so forth.
3. Subtract your needs and wants from your income.
After computing all your needs and wants, subtract everything from your income. Make sure that your income includes all your sources, such as money from renting out a property, income from a store, income from your freelancing job, and income from a regular job. If after subtracting your expenses, you find that your total is zero, then rethink your wants list and scrap out or replace some items. Having very high expenses means that you are spending beyond your means, and your financial plan needs a serious overhaul.
4. Follow the 40-60 rule.
One way to assure that you have savings every payday is to follow the 60-40 rule. This means that you should allot 40% of your total income to your savings account, retirement fund, emergency fund, and investments such as mutual funds, stocks and bonds. The rest of the amount (60%) can go to all your expenses including your needs and wants. By prioritizing savings rather than allocating money for expenses first, you are sure that you can have extra money you can use in case of emergencies.
5. Allow yourself a luxury now and then.
If you spend your life setting aside a huge chunk of your income towards your savings account, you may feel guilty about spending your money on things you enjoy. This takes the joy out of spending our money on fun things that could make you happy. Actually allowing yourself to enjoy your hard-earned money (not all of it, though) motivates you to keep saving for a longer period of time.
Follow these ways of balancing your needs and wants in order to increase the amount of your savings and minimize risks for debts. If you want more saving tips, check out MoneyMax.ph, where you can get more useful insights on how to manage your personal finances in such a way that you are allowed to enjoy life once in a while.
Cristina Beltran is a writer, blogger and online marketing specialist at MoneyMax.ph, Philippines’ leading financial comparison website.
Savings – for some, it is something their wish. Others think that they will have it if only they have more income. Others do not care at all. Are you among the few who really strive to allocate a portion of their income to savings?
If you want to retire young, you really should prioritize on saving a portion of your income. My husband and I retired from the workforce at a young age. It took a lot of foresight and planning to achieve this dream but if you know how to save and to live frugally, you have good chances of living a comfortable life, at the least.
I could never stress enough the importance of saving. Our rule of thumb is to have a savings that will cover at least three months of your expenses including, but not limited to, mortgage, car amortization, estimated utilities, food and other fixed expenses that you have. Aside from the emergency fund, you can use your excess saving to invest and earn passive income in that process.
If you think that saving is such a hard goal to reach, I would like you to check out this infographic about the high cost of not saving.
Based on this infographic, if you do not save, the longer you need to work before you can retire. It failed to mention that what makes it expensive too is the fact that you need to rely on loans (home loans, title loans, car loans and similar loans) and incur interest expenses if you do not have enough savings.
Anyway, do you agree that it is indeed more expensive not to save than to put something into your savings regularly? Care to share your thoughts?