Money doesn’t buy you happiness, but, it is a huge part of life. Having, or not having money can really impact your quality of life. So, why is it that schools don’t teach us how to be clever with what we earn? As we aren’t taught money management from a young age, it can be so easy to fall into debt, or to splurge as soon as you get paid. So here are five super easy tips for managing your money.
The first step in money management is working out what you are actually spending per week/fortnight/month. Keep a log of how much you spend on the essentials like rent (or a mortgage), bills (electricity/ internet), food, and travel costs. Then look at how much you’re spending on non essentials. Try to account for everything you spend! The aim is to work out how much, if any, you have left over.
Once you’ve worked out how much you’re spending you can start to organise your finances. A Budget is designed to stop you from overspending and to help you have some left over to save. The general rule with a budget is to use 50-60% of earnings on the essential fixed costs, like rent, food, and bills. These usually stay the same in amount so its easy to work out how much you need to set aside for this. It’s also suggested that you put 5-10% into savings, for both short and long term. Having savings will cover you if something unexpected happens- like if your car breaks down.
This goes hand in hand with budgeting. Having savings will cover you if something unexpected happens. However, don’t forget to save for fun things too, it will motivate you! But be sensible! Don’t save for a holiday if you think you’ll need a new car in the near future. Having a clear idea of what you may need in the future and being prepared for that will stop you from getting yourself into an awkward situation.
Choose the Right Account
There are so many different options when it comes to bank accounts, but the type of account you have can make a big difference. If you are looking for a savings account, go for something that will allow you to accumulate lots of interest. If you’re unsure, talk to your bank and they will help you find the best account for your needs.
Make it Automatic
Most banks now offer automated transfers, meaning you can set an amount and a frequency for money to be transferred from one account to another. Set this up once and you’ll never have to think about it again! This is perfect for things like paying rent in a share house situation.
It might be hard at first to manage your money, however, if you’re smart, you won’t ever have to worry about finances again. After feeling the benefits of correct money management, you’ll never want to go back!