I have a special guest post for you tonight, courtesy of a blogger named Maricor Bunal. It’s easy to get caught up in the more-complex areas of personal finance, but sometimes it helps to remember some of the basic ways you can make smart, conscious decisions about what to do with your money.
Unless you win the lottery or become an instant celebrity somehow, there is no easy way to turn into a millionaire overnight. However, there are things that you can do that will make you one over a longer period of time. No matter how deep in debt you are or how little you are earning, these winning ways will make it possible for you to stick to your budget and build up a healthy amount of savings:
1. Create A Budget
The first step to sticking to a budget is to create one. An attainable budget should have four parts: sources of money, expected expenses, spending money, and savings. Know how much you expect to receive in a month. Sources of money could be your income (if you are working), amounts earned from side hustles, and/or returns on investments such as rental property. From this, subtract possible expenses (taxes, tuition fees, board and lodging costs, transportation, gas money). The money you have left, divide between spending money (eating out, shopping, or night outs) and savings (cash you will not touch no matter what). In case something unexpected comes up (car breakdown or an emergency appendectomy), you should set aside some savings in an emergency fund, before starting to invest it.
2. Pay Your Dues On Time
Pay off debt as soon as possible, so you stop accruing interest. Also, avoid incurring late payment penalties. Late payments can result in a bad credit score, and your account could be sent to a collection agency.
3. Keep Track Of Your Money
Monitor your daily expenses to have an idea on where you are overspending. How much of your money is going to things you need? How much to things you want? By getting an answer to this questions, you would be able to determine where to cut your expenses. Tracking your money will also give you a clear picture of your financial situation and force you to prioritize. Mindless spending will get you nowhere, whereas a track record of your expenses can help direct your path.
4. Save For The Future
Life can throw you a curve ball anytime, and the best way to catch it is with a healthy emergency savings. But, beyond just surviving from day to day, what is that one thing money can buy for you that will make you truly happy? A house by the sea? A week-long holiday in Paris? Lasik eye surgery? What about saving enough money to be financially independent and never have to work again. Some things are worth saving for. Having a goal in mind can provide the motivation you need to get serious about your finances.
If you are ready to start building your savings, then the tips mentioned above will get you on the right track. Whether you are in your 20’s or in your 50’s, the best time to start sticking to your budget is now. All you have to do is pay off debt, track your expenses, and set some awesome goals for your future.
Thanks Maricor!
Who wants to provide the next guest post on Creating My Kaleidoscope? Feel free to send me an email at creatingmykaleidoscope@gmail.com. I would love to feature some different content about money, family, financial independence, side hustles, DIY or upcyle projects, or other topics.
Basically, if it represents the spirit of this blog, I will try to post it for you and the benefit of my readers.
Thanks for sharing, Harmony. And thanks for the tips, Maricor. Tracking expenses is so important. Many people lie to themselves about how much they spend. They also don’t take into consideration the one-off expense, like a home repair, or the yearly expenses like insurance policies.
Mrs Groovy recently posted…If No One from the Fab Five Steps Up, the Groovy Two are Screwed
Yes, it’s so easy to forget about yearly expenses when you’re trying to create a budget. Tracking every penny is the only way to really understand your financial situation.
Thanks for sharing Maricor. These are great tips on building wealth. Creating a budget is definitely the most important thing that I did it order to reach my financial goals. Before I created a budget I was constantly wondering where I was spending all my money. Now that I have a budget I get to choose where I allocate my money which has allowed me to choose what I value vs. mindless spending.
Mustard Seed Money recently posted…Donating Money to Your College
Thanks for stopping by! When you’re not paying attention to how you spend your money, it becomes impossible to make financial plans. We were very guilty of mindless spending, little by little, and the practice resulted in having a significant amount of debt.
Good tips. A lot of people never learn these. If more people learned these and other stuff society I believe would be better off.
Doug recently posted…New Buy AZZ
I completely agree. People just seem to live to spend. They think that it’s normal, so they don’t question whether it’s good for their financial future.