In a world where everything seduces your money, not having a strong structure that helps you manage your spendings and savings will put you into financial trouble. If you are not careful, the tendency is high that you will go bankrupt. Reckless spending of money aggravates to poverty at the end of the day. Due to no or little financial education, most people wreck their financial lives after slaving their days away to make money. Money runs away from those who do not know how to handle it properly. It only grows when it is spent prudently and saved wisely. Here are tips on how to manage your spendings and savings:
Save a fixed percentage of your income every month
Set aside some amount of money for savings every month. As difficult as it may be, train yourself not to spend all your money on foods or other things. Spending everything you make will put you in a tight situation where you would be helpless when you need money and none is forthcoming. To encourage yourself, have a goal for saving. You might want to save towards an investment plan, buying a new house, starting a new business, sending your kids to college, etc. Having a goal will help you to be consistent with your savings. You might want to invest some of savings with a finance company so that you get some profit on the investment. However, you would need to read reviews about finance companies so that you know which would be most profitable and risk-free for you.
Distinguish your needs from wants
It is not everything you want to buy that you should buy. Some things will not pay you in the long run. At worse, they may become white elephants that you are not profiting from in any way but are spending money on to maintain. For instance, if you can still save more money and time taking the local train to work than buying your own personal car, then having a personal car is not a pressing need at that moment. Also, try to discern when your needs become wants. You need a pair of shoes, but that need becomes a want when you desire six shoes of different shades of colours. Try as much as possible to streamline your needs and wants and spend money on only the important ones.
Make a scale of preference
You should have a priority list if you want to better manage your spendings and savings. On your scale, your savings should come first followed by your needs then your wants. After getting your income, remove your savings and buy the most important things from the balance. Having a priority list helps to guard against excessive and unnecessary spending, while simultaneously ensuring that you buy the things you really need. To make this technique to be really effective, do not fall victim to impulsive buying. If something is not in your budget, do not buy it except if it is an extreme case.
Make provision for miscellaneous spending
While planning your budget, allot some part of your income to miscellaneous. Usually, the money alloted to miscellaneous is 10%. You could follow guide if it works for you or you could make yours lesser. Whichever way, do not allot more than 10% to miscellaneous. Be prudent with your spending as much as you can.
Use the cheapest companies for recurrent expenditure
Recurrent expenditure such as light, water, internet connection, call airtime, etc. can suck your fortune if you are not careful. Apart from budgeting for these things, find companies who do not charge exorbitantly to provide such services. Go for those with low-cost maintenance plans. You do not have to approach the ones with premium prices if you cannot afford it. This way, you will effectively make the most out of your money and be able to save the rest.