It is no secret that obtaining and managing finances can be a process of trial and error before you get it right. It can be easy to feel lost and confused, but make no mistake – every single person goes through a learning curve with their finances. Everyone starts from the same place, so never feel like it is just you that is struggling to right the ship and maintain a firm grasp on its trajectory. The nature of finance is that it often feels more frustrating than it should. Thankfully, it doesn’t have to. There is a lot of advice out there that is geared specifically towards understanding and mastering the art of handling your finances. So, what is the best financial advice you can possibly get?
Map out your expenses
While it might seem like a given, many people make the mistake of winging it when it comes to handling their finances. Before anything else, you should be mapping out your expenses – specifically, the compulsory costs (think rent/mortgage payments, groceries, electricity and water bills, phone wills, internet payments, car costs, personal super contributions, tax – if you have to pay it yourself as a sole trader or business owner, etc). Include due dates. This will give you a real-time play-by-play of the costs you need to account for. Start here. Once you have mapped out your expenses, you can start to work out a realistic budget.
Create a self-imposed budget and savings system
Creating a budget for yourself will go miles in allowing you to actively and consistently save money, rather than always spending, spending, spending. Once you know your fortnightly or monthly compulsory lifestyle costs, account for some personal leisure money, and then save a set amount. Try to save at least a third of your paycheck, if not half, and you will start to see your savings climb. It might help to have separate bank accounts for different aspects of your finances (i.e. savings, bills, spending, safety net, etc). In doing this, you give yourself the chance to not only maintain the lifestyle you have built for yourself, but to also build up steadily climbing savings that will help you to become more financially secure over time.
Build up to a safety net, then stay above that net
In addition to building up your savings, give a set amount to a “safety net” account as well. This is a financial amount that is set aside for rainy days (think unforeseen costs of all types). There are different ways to approach this ideal, and different ways work for different individuals and different circumstances. For some people, they invest in ways to learn how to safely earn cryptocurrency in addition to having built up their personal safety net, while others stick to the traditional use of a safety net. Whichever way you go about it, the point always remains the same: a safety net is just that, a safety net. Avoid spending it, and watch it balloon to become more and more comfortable over time.