- Have a record of monthly expenditure
Many people do not know how much they spend each month on food, clothing, housing, or entertainment. Add up your total expenditures at the end of the month so that you can know how you are spending your income.
- Have a monthly budget you can follow
Having determined your monthly expenses, have a realistic budget that you can follow. Track how well you follow it each month; this means you have to continue to track your monthly expenses. Having a budget helps you to keep yourself in check and not engage in a spending spree.
- Be sure to budget for savings
You should save a portion of your monthly income; this could be between 10%-15%. Your savings can later be turned into investments, projects like getting a higher education, buying a home, etc. Savings could also be a Rainy Day Fund, which is important when unforeseen expenses or emergencies arise. If you find or earn extra income apart from the regular one, be sure to save it too and not spend it all up.
- Pay your monthly bills on time and avoid late charges
Take stock of all your monthly and annual bills and ensure you pay them as soon as they are due. This could include rent where applicable, it is better to plan ahead before the landlord comes knocking. Make reminders for yourself on when each bill is due. That way you can avoid paying extra because of late fees and fines. It is best to pay bills as soon as they arrive.
- Eliminate credit card debt
Credit cards can make it easy to pile on debt. If your debt adds up faster than you can pay it off, you’re likely living beyond your means. Stop using the credit cards and pay off existing balances – the sooner you do, the less you’ll pay in interest. However, not all debt is bad; taking a loan for education or taking a mortgage to buy a home is an investment in the future.
- Maximize opportunities
If your employer offers a contribution for your retirement savings scheme, ensure you contribute sufficiently to the scheme so that you can have a substantial amount at the end of the day. Otherwise, you are not maximizing the opportunity. Also, maximizing your contributions can lower your taxable income.
- Evaluate your insurance policies
Insurance is an important tool for protecting against financial hardships and mishaps; the premiums paid could sometimes be heavy and a major burden. Talk with your provider to be sure you have the appropriate level of protection – that way, you’re not paying too much for coverage.
- Use trusted and legitimate financial institutions
Nowadays, there are savings and loan institutions, credit unions and societies that help to manage money. Many people do not rely on traditional banks or financial institutions to manage their money. Open a checking and/or savings account at an insured bank, savings and loan, or credit union. However, ensure that you research whether there are any fees for their services before joining an institution.
- Look for new opportunities
It is good to look out for other opportunities and new sources of income, particularly if the basic monthly income is not very fat. Having other avenues of income could help to make all the difference. This could be trading in goods, investment in stocks, investments in real property etc.