When it comes to money management, there are plenty of people who have a hard time figuring out how to Save more than Spend. It may sound simple, but many people are in debt not because they don’t make enough money, rather because of the mismanagement of their money.
Analyze your current Finances
The first step begins with knowing exactly how much money you make and what your overhead looks like. Sit down with a pencil and a calculator and write down all of your expenses. Start with the biggest ones first, such as your rent or mortgage, car payment, and all of your utilities such as electricity, water, oil or gas. Don’t forget your insurances, such as auto, life, health or any other types and then include your typical weekly food bills. Do you spend money on clothing and leisure activities? Those items must also be part of the tally. Once you have added all of your expenses, you’ll you need to find the monthly average of your income.
Staying on Track with Your Family Budget
Next, it's time to subtract your monthly income from your expenses. The leftover money from your expenses should now be slashed in half and stashed away in a savings account. Try to do this every single month to save for contingencies. Unexpected car repairs, home repairs or family emergencies should not come out of your main supply that is needed for bills; therefore having the savings account will help you to stay on track.
Another big element required in proper money management is based upon your understanding on how and when to borrow money. The first thing you must do when borrowing money is assess the interest rate. When it comes time to look at your loan payments/line of credit, are you going to be overstretched? A lot of people get antsy or impatient and go for the first lender that is willing to say yes. This often leads to high interest rates and ballooned payments. You should only take a loan out if it’s absolutely necessary. Make sure you have a clean game plan to pay back the loan. And even then, ask yourself if the thing you want is truly a need or a want? Don’t live beyond your means, and make sure you are getting the lowest interest rate available.
Pad Your Savings by Investing
When it comes to managing your money the right way, you should also consider investing some of it. There are so many ways to do this, and you will need to properly research the marketplace to determine what types of investments make the most sense for you. Some might prefer the stock market, while others might try real estate or insurance. Having a mentor to help you invest can lead you down a successful track and help you increase your profit margins. Once you have found the right investing solutions for you, it is imperative that you do so it on a regular basis. Not only will investing money correctly be very profitable, but it will also give you more discipline and responsibility. Take the time to set up investment plan every 6 months and you will develop good money management habits.
If you feel uncomfortable in researching yourself, make a point to discuss this with your financial advisor and get them to help you with finding the right investment tool based on your risk adversity.
For more information please contact Independent Financial Concepts Group today at 1-416-849-1653 or visit www.wecoveryou.ca