Steps to manage your money the right way

Steps to manage your money the right way

Financial Services Port Elizabeth

  • Create a budget
    First things first: create a budget if you haven’t already. Is it necessary? Are windshield wipers necessary in the rain? Trust me, you need one. Creating and sticking to a budget might seem a little tough to achieve at first but it pays off in the end (no pun intended). Budgeting helps us see with clarity and full transparency our financial situation and this is of most importance for better managing your money. It’s the first step to help us pay off debt and start saving for future expenses such as a mortgage, a car, and your retirement.
  • Understand your expenses
    Ask anyone off the top of their head to tell you how much they spend a month on everything and they might not be able to do so. This isn’t rare. Many people actually don’t know the total amount of expenses they generate on any given month. This is a problem but there is an easy solution for it. Here it is: for one month, keep track of all your expenses. Easy-peasy. Take all your receipts (groceries, restaurant bills, utilities, etc.) and look at your bank statements and add up all of your expenses. Remember to keep track of expenses paid by cash as well as credit cards. The idea is to have all your expenses (both variable and fixed) accounted for to get a total amountThis will allow you to see the whole picture and know how to manage your expenses going forward. You will also want to compare your historical performance over time.
  • Understand your income
    Ask anyone off the top of their head to tell you how much they make a month and although they probably won’t tell you, internally they know. This is the difference between income and expenses, most people know their full monthly income but have less knowledge of their full monthly expenses. Nonetheless, the point is to figure out your total expenses and subtract that from your total income for the month in question. Here is how the results should pan out:If you end up with a negative number this means you spent more than you made.  Actions to take? Reduce your spending and expenses until the total reaches zero.If you end up with a positive number this is good (high five!) and means you spent less you made.  Actions to take? You could increase your debt payments or increase your savings.
  • Create an emergency fund
     Emergency funds are an important part of a healthy personal finance plan. In almost all cases, you shouldn’t touch or take money out of the fund, rather, let it sit      there earning interest. If you lose your job or an unfortunate or unexpected expense arises—such as your car breaking down or a tree falling on your roof—this is when you should  tap into it.
  • Get a Financial Advisor
    The first question you should ask yourself is whether you are up for the task of managing your investments on your own. This requires, in most cases, many hours of research, and constantly updating yourself on global economies and companies’ stocks and shares movements. Financial planners can also help you remain disciplined with your financial strategies and they will keep track of your finances, allowing them to make the right moves for you or to help you make the right moves yourself. Financial advisors also regularly review their client’s portfolio, taking into account changing market conditions, changing legislation, taxation etc. so that they ensure the fund is still correctly invested. Not only this but a financial advisor will often be able to also give advice on matters such as taxation, drawing up of wills, trusts, insurance and even emigration, to name just a few.
2018-09-18T11:11:21+00:00 Latest News|

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