Avoid mistakes that ruin your budget
Spending more than you earn? Borrowing money to cover monthly expenses? Paying at the supermarket more than you expect?
Money is a mean that is meant to improve our lives. It shouldn’t be a burden. If we aren’t going to use it for our happiness then let’s think again. How to use money for our best interest and spend it wisely is what I will cover in this blog.
1. Track Your Finances
Most of us spend money without keeping track. Thus to be able to figure out how to spend money more wisely, we first need to understand where the money is going.
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Make a rough budget of your regular income and expenses
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Specify all the income that you earn on a given month
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Make a list of the services and goods you need to spend money on
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Keep a log of the actual month expenses
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Apart from the monthly overheads, ask yourself if what you bought is a necessity or not; is there anything you shouldn’t have bought?
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After analysing the expenses, make adjustments on where you can cut the expenses.
2. What Habits Drain Your Budget
After tracking and analysing your expenditures, you can begin looking for habits that may be draining your budget. These habits could include expensive hobbies, eating out too much, spending too much money on clothing, or any number of other financial drains. Once you figure out which habits are consuming large portions of your income, you can then adjust your expenses by reducing or getting rid of these habits.
3. Tie your money to a goal
It's always a smart idea to make a plan for spending your money. If you pair your money with intention and have a goal on how you want to spend this money, like an annual vacation, a down payment, a piece of furniture, or even school fees. Making this tie, you’ll be more careful on spending on unnecessities. If it helps, you can make it visual and place your goal on the phone background, on a board next to bed, or next to your computer to always remember. Try to stick to the 50, 30, 20 rule if you can, that is spend 50% of your income, Invest 30%, and save 20%
4. Learn more about yourself to spend smarter
One thing that will make a great difference to your spending habits is knowing yourself. What really makes you happy, for example, is it going fancy shopping or a walk by the beach? By being self conscious you’ll know what you’re tempted by and how to guard yourself against it, you’ll also know what you need and what you want and how to balance it and spend smarter. Look at the list below:
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Avoid shopping malls, especially on sale.
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Buy online what you specifically need.
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Buy what you use regularly in bulk.
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Plan your weekly meals and buy groceries once a week.
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Reduce eating out.
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Workout at home if the gym fees are expensive.
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Use electricity efficiently.
As long as you're cutting back on the things you don't need, it's fine to spend money on the experiences, services, and products that bring you joy or make your life easier, without distracting from your financial goals. At the end of the day, money is a means to an end.
