Stick to a Budget
Step #1 List down your monthly income and expenses.
According to Vic, the top skill in financial management is identifying where your money comes from and where it goes. list down all your sources of income every month so that you can plan your savings and expenses properly.
Next, note down all your expenses for the month. It doesn’t matter how big or small the amounts are, just write it all down. Keeping track of all your spending will show you if you are on the right track budget-wise or if you are spending too much on things that you don’t really need.
“Carry a small notebook everywhere and record all purchases and withrawals. You’ll be amazed at what you learn about your spendinghabits. For example, many people find that they spend thousands of pesos each year on snacks, clothes or cellular phone bills. People usually get into trouble with non-essentials-the things they could easily do without. The goal of tracking expenses is to understand where you’re spending your money.”
Step #2 Analyse each item in our expense list.
Ask yourself: Is there an item you can quit spending so much on? Is there a cheaper alternative you can tap? For example, do you really need to buy that leading brand of toothpaste or is there a more budget-friendly option?
Step #3 Stick to the 70-20-10 formula
The Garcias teach that you should live within just 70 percent of your income. The remaining 20 percent should go to a savings or emergency fund. ” This is important so that whatever happens, if there is sickness or an emergency in the family, you don’t have to borrow,” explain Vic.
The las ten percent, Vic and Avelynn say, belongs to God and should be given to your church. “If you invest your money in a bank, you get two to five percent interest, but if you give to God. He promises a hundred-fold blessing. The Garcias set aside this donation first thing every month, and even go beyond ten percent when they can manage it.
Step#4 Open at least two bank accounts
Money kept on hand s easily spent so better to stash it at the bank. Get a regular account for your revolving fund, the money allotted for your daily expenses. Get another account to hold your contingency or emergency fund. Vic says this second account should contain three times the amount of your monthly expenses. If you lose your job for example, at least you have three months to look for one before you run out of cash.
Once the contingency fund reaches that minimum amount,it is time to open another account for your short-term and long-term savings. Use this third account to save up for major purchases, such as household appliances, furniture, or a car.
source: Good Housekeeping
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