Increasing your income doesn't necessarily improve your finances. In fact, some financial guru advises to still save while you’re broke. It’s more about making it a habit and not necessarily the sum you’re able to save. Better money management can help people reduce their spending, increase their investment and savings abilities, and achieve financial goals they thought were unachievable. Especially, if you are now settling from the Christmas festivities and your bank account is looking a little deflated from all the expenses you made or simply this year may have been eventful like many others with unforeseen expenses. It is a prerogative of yours now to make sure that you do not end up going into your savings and ending up in debt. Here are some helpful tips to help you stay afloat.
“ When you fail to plan, you plan to fail”. The same principle applies here without a plan, it is extremely easy to overspend. Make lists, lots of lists. These will help when you’re going shopping or running errands. Writing down everything you urgently need in a list, will help you curb impulse buying. A cut down on impulse buying will ultimately cut down your spending and on your finances.
It is tempting to embrace the treat yourself logic. Too many unnecessary expenses might leave you disappointed with your savings. Prepare an effective budget to prevent this. Plan where you'll spend your money. Consider your future savings goals along with your everyday expenses. Additionally, you should find a budgeting method that works for you because it will help you manage your money better. This brings us to the next point.
The chances are that your personal spending habits can be improved if you don't know what and where you are spending each month. There are plenty of apps out there that can help you establish a monthly budget based on how much money you have coming in and what you typically put your money towards. Apps, like Wally and Level money on Google play store and App Store on Apple, will keep you on top of how you’re doing over the course of the month and let you know if you’re going in the red. Keeping track of your spending is key to effective money management. Using spending tracking apps can help you identify how much you're spending on non-essentials such as dining, entertainment, and even that daily cup of coffee. Once you're aware of these habits, you can take action to improve them.
In Ghana, this is usually the main medium of payment, however, if you do have a credit card, it is wise to stick to cash. Before going into a supermarket or going out to eat, etc, make sure to visit the ATM to take out an estimated amount of what you will be spending. This will help you to spend within that budget instead of splurging, if you otherwise were using a credit card. Credit cards allow you to spend more than necessary but having a fixed amount means you cannot overspend.
Make an emergency fund that you can dip into when unforeseen circumstances arise. Contributions to this fund, no matter how small, can keep you from being forced to borrow money at high-interest rates or finding yourself unable to pay your bills on time. Furthermore, you should make general savings contributions to improve your financial security in the event of a job loss. Automate your contributions to grow this fund and reinforce the habit of putting away money.
Most of us didn’t like hearing “there’s food at home” when our parents used to say it to us. Having this mentality can help you save some money on a monthly basis. Pack a lunch and snack to work each day to avoid buying food from fast food joints, etc. Put an end to stopping at coffee and pastry stops. Cutting back on these visits a couple of times each week can give your bank account some extra breathing room and you will have a little extra money to spend on items you really need.
Subscriptions on gym membership, Netflix, DSTV, etc that are not in use should be cancelled. Whether you’re not using your gym membership or you only use one streaming service versus all the ones you’re paying for, it’s a good idea to look at the subscription fees you’re paying and see if there are any you could eliminate.
No matter what your ability to invest is, small contributions to investment accounts can help you use your earned money to generate more income. Take the time to open a retirement account. Achieving better finances starts with changing your own habits. If you're committed to this transformation, you'll gain great money management skills that will serve you throughout your lifetime, and in the meantime, you'll have more money in your pocket.
To save money effectively, discipline is essential. Discipline and determination will keep you from falling into debt. If you do not follow these tips, they will be of no help to you and budgeting is the cornerstone of good money management.