Managing your finances can be a difficult process; no matter how hard you try there are always unforeseen expenses which can knock a hole in your budgeting. The secret to getting your finances in shape is to spend a little tile organizing them and yourself. The following five tips will assist you:
1. Budget weekly
The most important thing to do financially is to create a budget! This is simply a sheet which lists all your income and all your outgoings. Your budget should include allowances for essential such as food and fuel but not luxuries; like nights out. This is so that you know how much money you need to meet your bills and how much you have left over; your disposable income.
Once you have worked this out you may need a calendar to help you record payment dates. This will ensure you never miss a payment and that you can plan your financial expenditure around these dates and amounts. Finally, you need to split your budget down into a weekly analysis; this will ensure you can stay on target for your long term commitments and always know where your money is going.
The majority if people have some form of debt and this is often seen as a part of life. One of the long term aims of your financial reviews should be to eliminate this debt.
Start by removing unneeded items from your budget and then use the excess money to start overpaying your loans and credit cards. Experts will recommend that you pay the one with the highest interest first; this does make the most sense financially.
However, you may feel more motivated if you target the smaller debts first; you will be able to clear these quicker. Whichever approach you take, as one debt is cleared add the funds that would have gone to it to one of your other debts. This is known as the snowball effect and will rapidly reduce your debts.
In a digital age it may seem unusual to recommend cash, however, this is one of the easiest and best ways to start your financial life. Drawing only the cash that your budget allows will ensure you cannot overspend; you will quickly learn to live within your budget. You may find it useful to draw your funds out and split it into a variety of envelopes, each one marked with the intended use of the money. If you have completed your budget properly you will always have the funds you need, when you need them.
If you can afford to invest, then do it! Choose an alternative type of investment such as fine wine or art, and diversify your portfolio. The wine market in particular, can be unpredictable. And yet, there are smart ways to see returns on your investment.
Start by investing in wine with a solid background. Don’t take unnecessary risks, and try not to spend money at random. Get advice from an experienced merchant, and your case of vintage Bordeaux might bring you serious returns in 5 years from now.
Before you can focus on savings, or even on clearing your debts; you should focus on building an emergency reserve. This should, ideally, be between three and six months income. The point of this is to have funds available if you have an emergency, such as a major car repair. An emergency fund will prevent you from needing to create more debt. If you have managed to clear all your debts, then it is advisable to start putting some savings aside automatically. This is when the bank automatically transfers a set amount of your funds into a savings account as soon as they arrive in your bank. As they are already gone you will not miss them! Increasing this by as little as one percent each year can provide you with an excellent nest egg.
5. Pay increase
There is no harm in asking for a pay increase! You should prepare a case as to why you justify more money, what additional skills you have learnt and what extra responsibilities now falls on your shoulders. If the answer is no it may be time to consider what other jobs are available which will pay more. Earning more does not prevent the need to follow the other tips listed here; it will just make life a little easier.
Getting your financial life in better shape is not that difficult. You need a plan to get started and maybe some professional assistance too. Consult with a financial advisor, and talk about your hopes and dreams. Find a way to get out of debt, and get your financial freedom back.
By John Smith and WineInvestment.com!