Your well-being or financial situation is unique and particular. Frequently, we believe that wellness equals how much money we earn, our credit score, or the net worth we have. In fact, your financial well-being is determined by factors that more broadly reflect how you manage your money. These include how well you are able to keep up with your financial obligations, how confident you are about the future, and, ultimately, whether or not you have enough freedom to make those financial decisions that allow you to enjoy life.
Understanding where your money is going
The history of your finances begins by comparing the past with the present. What do you spend on? Where does your income come from? By monitoring these factors, you can get a better idea of how you use your money today, so you can plan for the future.
Know where your money comes from
Before you can take any steps to improve, you need to have a clear idea of the state of your finances. Start by reviewing your sources of income.
Know where your money is going
To manage your money, you need to have a way to track your daily expenses that allows you to control total spending. The important thing is that you have and maintain the expense control system that works best for you.
Record the due date of your accounts on a calendar
If you’re having trouble meeting your commitments at the end of the month, your income and expenses may not occur at the same time. Therefore, it is helpful to have a complete picture of your finances.
Making small changes can make a big difference
There are small steps you can take to change history with your finances. Once you are clear on how you are doing with your money, follow these tips to help you sync your expenses with your income.
Make a budget that fits your cash flow
Cash flow tells you when your money goes in and when it goes out. Reviewing it weekly, especially if you tend to be short on money, can help you make a budget that works for you.
Ask that your bills have due dates to help you stay current
If you have weeks, during which you are tight on money, you can contact your creditors and utility companies and ask them to designate new due dates that better match your income dates.
Compare your expenses from month to month
Monitor your spending for several months. By looking at your expenses in real-time and comparing it to the previous month, you will begin to find areas where you can make adjustments and save money for your savings.
Achieve financial security, have an emergency fund
Start by saving what you can so that you can cover many of the most common emergencies which would otherwise become costly debt. Make this your most important savings goal, and then when your financial situation improves, you can start saving more money.
Set rules for using your savings for emergencies, but don’t be afraid to use them
Determine how and when you will be able to spend these savings and define what an emergency is, but if you need it, don’t be afraid to spend it. The savings are there for that, just remember to work to rebuild them.