…And it can be done by the end of the month!
You look after your physical health by eating well and keeping fit, but what about your financial health?
We all have various general expenses that chomp at our salaries, such as:
So how do we take that island holiday, or buy a much-needed car (or those shoes), without getting into debt?
‘Personal finance’ simply refers to how you manage your money, and what you do to plan for your future. Improving your financial position is easier than you think; it just takes a bit of planning. Without increasing your income, you could try reducing your expenses.
Begin with these easy steps:
- Try to set up a monthly budget, and stick to it! A simple money-in money-out (the difference between what you earn and what you owe) budget will track your spending by showing you where your money is being spent. A spending plan will help to pay for emergency or unexpected expenses and save for future goals.
- If you spend more than you earn, you could find it tough to plan and get ahead. Try cutting your spending so that you have more to save. And never increase your spending when you start earning a higher salary (also known as lifestyle inflation).
- Get rid of your credit card and use cash or a debit card. If this is not possible, try to pay off the outstanding balance at the end of each and every month to avoid paying interest. If you DO need to use your credit card, use it to buy ‘needs’, before spending on ‘wants’.
- Always have a savings plan. Once your debts have been paid, try to set aside at least 5% of your monthly salary, and keep it in a separate savings account. The sooner you start, the better, because the longer earnings are invested, the greater the value (known as compounding).
- Insurance to protect your health, possessions, family and income is necessary, but check these regularly to find out where you can save or reduce premiums.
Improving your financial health starts with the first step. Make that first step today and make it a habit.