5 Ways to Effectively Manage your Finances
Life is all about balance and management. A person who knows how to accomplish this knows the art of living. Every sphere of life needs management practices. In this article, let’s learn the importance of management in the financial aspect of life and how an individual can shape their routine to effectively manage their finances.
Here are 5 ways in which you can effectively manage your finances.
1. Track and understand your spending habits
First off, to solve a problem it is necessary to analyze the loophole. In order to effectively manage your finances, you have to make a conscious effort to track your spending. After tracking, organize your spending into two categories: good spending and bad spending. That way, you can hold yourself accountable. Self-accountability is the first step to track your free-spending and control them for the greater good.
You can use money management applications for tracking your finances. Some of the efficient money management applications are AndroMoney, GoodBudget, Mint, and more. You can track your spending habits with these applications and see for yourself how much you’re spending on non-essentials such as dining, entertainment, and even that daily coffee. Once you learn how to track your spending habits, you can make a plan to improve.
2. Do not fill up your wallet
The most important habit in order to manage your finances is to take only the sufficient cash you need. Before leaving the house make sure to check your wallet and keep the cash that you need on hand that one day. Don’t keep unnecessary cash because it will lead to overspending. If you spend extra in one day then this will affect your whole budget. So be mindful while keeping cash in your wallet. For example: you plan to buy groceries from the grocery store. First, make a list on your mobile phone of items that you want to purchase. After that, calculate the estimated amount and then put that amount in your wallet. Leave the rest of your cash and debit cards at home. This habit seems very small but will have a great impact on your financial spending habits.
3. Unsubscribe from all email marketing from brands
Some people have a bad habit of impulse buying. If you are an impulse buyer, you need to cut ties with all those emails and subscriptions that persuade you to buy impulsively. If you’ve bought through Instagram before, turn off your notifications for that particular profile page so that when they post you will not be distracted by their amazing bundle offers and “Up to 40% Off” sales. This is a small habit to adopt but truly worth it. So, unsubscribe emails from different brands and mute notifications on Instagram pages.
4. When your heart craves something, wait for at least 24 hours before purchasing
Most of the time, people abruptly buy anything that their heart desires or what they see on social media pages. Excessive online shopping also has a negative impact on personal financing. This is why when your heart desires to buy something, give it at least 24 hours for yourself rather than instantly buying that product. In those 24 hours, you’ll realize that most of your buying is just compulsive buying. Most of the time you don’t need that product and you still buy it because of that instant craving. Make it a habit to think for at least 24 hours before investing a big amount. This habit will help you to manage your finances effectively.
5. Be aware of the consequences of overspending
At times when we’re shopping, we “accidently” overspend. We think we’ll easily pay ourselves back. To avoid this thought process you have to make yourself aware of the after-effects of extra-spending. Make it a daily habit to make a budget and then educate yourself about the importance of that budget. Tell yourself that if you do extra-spending then you cannot fulfill your long-term plans, your goal of financial freedom will never be in fruition, and vacation plans will be cancelled due to your everyday overspending. All these small habits will rewire your thinking to become aware of the consequences of overspending.
In conclusion, it’s the small habits that count. Small habits play a huge role in self-improvement. Combined with financial goals, it will be to your benefit to apply and repeat these habit changes to achieve financial success. Spend wisely, live efficiently.
It is immaculately stated by Warren Buffet,
“Do not save what is left after spending, but spend what is left after saving.”