5 ways to manage your expenses so you don’t go financially broke everadmin
Are you somebody that preferences living on the edge, from salary to salary, purchasing something as and when you set eyes on it, without worrying about your savings, what’s more, a ‘Dekha jayega’ attitude? That may appear to be cool – but at the same time, it’s a shortcut route to financial disaster.
Here is a list of 5 ways to manage your expenses so you don’t go financially broke ever.
1. Track your expenses through Money Management App:
If you have never been the type to track your expenses, now is a good time to start. You can download an app that tracks your spends and set a budget. Keep a watch on your upcoming credit card and utility bill payments, as well as see how much you owe or have to get from others. This is the first step to getting your finances streamlined.
2. Make a good Financial plan and set Goals:
Goals can be set on a short-term and long-term basis. Setting a goal could be anything like buying a new phone, buying a laptop, buying a new bike, buying a new house or getting married and so on. Based on the plan, break it down into quarterly and monthly goals so you know how much to save, how much is safe to spend and so on. Having a plan will give you an overview and much better control of your finances.
3. Set up an emergency fund:
Once you’re tracking your expenses and have set goals. You know how much money you need to allocate to each of them. You would also get an estimate of your spending pattern and expenses for each month. Based on this, set up an emergency fund in case of any mishappening or a loss of the job or something else. You can set it up so that a certain percentage of your monthly income is automatically transferred to this fund. It could be in a different bank account or a fixed deposit. And most importantly, it should be accessible easily and quickly when needed urgently.
4. Set limits for your expense categories:
Take a look at your expenses in detail to understand where the money goes each month. Assign limits to each of these categories for the month. Then see how you’re doing at the end of the month. This will give you an idea of your lifestyle and if you’re spending more than you earn, as well as where you can cut down on unnecessary expenses.
5. Stay debt-free:
Credit cards can be extremely useful for regular spends as well as during emergencies, and over time. A good payment history can boost your credit score too. But if you’re the type of person who cannot pay off the full credit card bills of each month or who just pays the minimum amount due. Stick to using your debit card or cash, or even a Line of Credit, which has a lower interest rate. Revolving credit on a credit card can be dangerous for your finances, and it can take you several years to repay the entire outstanding amount.
There will always be changes in situations like your current needs, and requirements as well as your cash flow. So every 3-6 months, you should re-look at your plan and goals. And modify as needed to stay on top of your finances.