Everyone dreams of financial freedom, but the sad truth is that not everyone is equipped with the skills to achieve it. Personal finance isn’t taught sometimes in school, and making ends meet every month doesn’t mean you’re in an ideal financial situation.
You might be living comfortably even though you’re surviving with living from paycheck to paycheck, but you’ll be left helpless once an emergency arises.
However, this doesn’t mean that financial freedom is an impossible goal. It is difficult, yes. It does take a lot of discipline. But simply put, it’s a very achievable goal if you have the necessary skills.
And the skills required aren’t too tricky or far-fetched. You don’t have to learn arcane mathematical equations to be on top of your finances; most of the skills we’ll discuss are all practical in application.
Following these will ultimately lead you to control your finances and not your finances controlling you.
Learn how to: Budget Your Resources and Track your Expenses
Of course, the first skill you need to learn is budgeting. That entails knowing how much you earn and all the potential income streams you have. Knowing how much money you have comes hand in hand with tracking your expenses to make sure you’re not overspending.
The best way to go about this is to track how much you spend on your total necessities for a month (minus unnecessary expenses and other luxuries, of course) and subtract that from your monthly income.
At this point, you should see what you’re spending too much on. Consider whether it’s necessary and think about removing the things that aren’t really of much use or value. What’s left is your overhead, and you can either use this for savings or investment.
There is a multitude of budgeting apps and software that’s for free. These help you keep track of your expenses and budget via your smartphone or computer, removing the need for tracking your expenses on paper.
That also allows you to be very specific with your budgeting as you can log even the smallest transactions.
Learn how to: NOT Spend Emotionally
We’re living in the age of retail therapy, and on stressful days, you might feel like indulging in an expensive dinner instead of eating at home.
However, living like this guarantees that your emotion will overtake proper financial decisions that will eventually spell disaster for you.
Not spending emotionally means controlling yourself with all forms of spending, be it small or large. It means not buying your favorite bag of chips when you just had one a while ago.
It also means that you can aim for a home for sale that you see, even if it’s within your financial capacity.
Learn how to stop yourself from spending emotionally by limiting your on-hand budget; either put your money in a savings account or an investment. This way, taking them out for whims won’t be as convenient.
Learn how to: Cook instead of Eating Out
We’ve always heard that cooking at home is cheaper than eating out, but many fail to follow this advice due to low-priced meals that are convenient to order.
However, these low prices will accumulate and reflect a large dent on your expense tracker. Not to mention that eating cheaper food options isn’t very healthy.
Instead of eating out, learn how to cook. It’s an excellent way to save money while still having fun and enjoying good food.
Buying ingredients that will last you for multiple meals is almost the same price as one meal, making your money last longer than it could if you were constantly eating at restaurants. Cooking for yourself is a healthier option as well, and health is wealth.
Taking care of your body will lower the risk of medical problems, and as we all know, medical issues often come with financial troubles. Learning how to cook hits two birds with one stone.
Learn how to: Navigate Online Banking
Personal finance has never been easier to control and maintain. We can now do banking transactions instantly with a touch of a finger, and the ten to fifteen business days have transformed to mere minutes to 24 hours at most.
That is all thanks to the progress of financial technology, and the innovations have extended far beyond industrial use to even individual, consumer-level use.
Learning how to navigate your way through online banking software will help make budgeting convenient for you. Not to mention, most banks offer incentives for using their online software too.
You might find discounts and rebates when using their system, making being financially responsible not only easy but also rewarding on many levels.
With these suggestions in mind, you can gain financial literacy that can help take care of expenses and budgets in the future. Taking care of yourself financially won’t be so daunting.