The world of personal finance can easily seem overwhelming , even to those who already have experience with bank accounts and paying bills.
Wouldn’t it be great to have a magic formula or a simple and quick solution to never have to worry about your money again?
Unfortunately, you can imagine: such a magic formula does not exist.
With a good strategy, a little curiosity and a knowledge of the basics of finance, anyone is able to change their relationship with money and keep their expenses under control.
Discover the 6 most important financial lessons everyone should know .
Define your goals
If you don’t know what your financial goals are , it’s bound to be difficult to achieve them.
To find the motivation to put aside, knowing what your needs are but also your desires will allow you to save more easily.
Whether you need to buy a new car or simply budget for your summer vacation , define each of your goals and the amount of money you will need to make this purchase .
You can then build a concrete plan and set aside each month to achieve them.
Once you’ve set your financial goals, prioritize them . This will allow you to focus on the goals that are most important to you first, or not to forget the most pressing.
Create a budget
Wanting to save without budgeting is like wanting to drive somewhere without a map or GPS – and with gas on the stash. You might not get very far.
You should be able to easily see where you are with your savings so you can achieve your goals.
Building a monthly budget is one of the best ways to control spending. Then, it’s all just a matter of will.
But also to understand where your money goes every month.
Most impulse purchases could be avoided with a solid budget. Whether you use a simple Excel spreadsheet or online budgeting software, the result will be the same: controlled spending, regular savings and healthy personal finances.
Set aside before you spend
We often tend to look at the problem the other way round.
At the end of the month, we have no more money to put aside for long-term expenses (like his first house, or his dream trip, for example).
It’s extremely easy to live beyond your means because we often don’t take into account the importance of saving for the future . We think that as long as we are not exposed, it is that there is no problem.
And often, we do not even realize that our lifestyle is not adapted to our financial situation. So the question isn’t whether we can afford this new, unbudgeted phone, but whether we can really afford not to put it aside.
Each month, for the health of your personal finances, you should save at least 15% of your salary .
These sums should be set aside to build an emergency fund , but also plan for long-term expenses.
To help you, you can schedule automatic internal transfers from your bank’s website. You will thus be “forced” to move a sum each month from your current account to one of your savings books.
Be curious about your personal finances
The world of finance can seem as boring as a game of Scrabble on Sunday afternoon at Grandma’s. But that’s because it’s often misunderstood.
We tend to see managing our finances as complex mathematics and paying bills. Learning how to manage your money , however, is much more about giving yourself the means to achieve your dreams without (too) worrying about money or achieving financial independence that is valuable for your personal development.
The main problem for people who can’t save money is often a lack of financial education . We are not taught how to properly manage our money at school, and that is a shame.
Good news: it’s never too late. With all the articles available online, the MOOCs on money management, and the many books on personal finance , the best time to learn about the world of finance is now .
Once you understand that managing your money is about giving yourself the means to achieve your dreams and your projects, you will want to do it much more.
Start setting aside as soon as possible
Thanks to the magic of compound interest , the simple act of putting aside earns you money .
The sooner you start saving for your goals, the better the return on investment will be. Although it’s never too late, starting to plan for your future as soon as you enter the workforce offers real long-term benefits.
Learning to put aside as soon as possible also opens the doors to new financial products such as investment.
Think (really) about every expense
A takeaway meal when you get home from work because you’re lazy to cook, a monthly subscription that you’re slow to cancel… Very often, you don’t realize the impact of each “small” expense on your wallet.
And that’s the main problem: it’s hard to change things when you’re not aware of them.
So sit down for a few minutes, and take the time to build an accurate budget . Define in advance how much you will be willing to spend this month for each category. This ranges from going out with friends to shopping for new clothes.
Then, once in a situation of temptation, the decision will be easier.
Plus, you’ll be able to see more easily where your money is going – and in which category you could cut your spending.
