Sometimes it may feel like there is never enough money. And in some cases, it is true. But to know when we need more and when we should simply reduce our spending, we have to start managing our finances.
We won’t say it’s easy. Loans, savings, salaries and every little penny we spend in the supermarket or online; there’s lots to manage. But not impossible.
What’s more important is that starting small is the best advice anyone can give you.
So, we are here to answer how can you start managing your finances.
Observe your spending
We have already mentioned some apps that are great to follow your expenditures. There’s one that Android users can download right now. Monefy. It’s a handy tool which lets you record every purchase with ease. They already have categories (leave them or make your own) but key here is to not start micromanaging every loaf of bread and cup of coffee. You will only get overwhelmed and stop recording altogether.
Pick 4-5 broad categories to follow where your money flows out. For example, home, groceries, maybe you play online games like on this page, pet care. The key here is to separate between things you must spend your money on and places where you could save. That’s all you have to do until you develop a habit of recording your expenses.
An ancient story that will get you out of debt
Chances are you have already heard of this book, called “The Richest Man in Babylon”. You should read it. Right now. It has many great lessons but here’s the most important one. Learn to live on 70% of your income.
Every dollar you earn, 20% goes to your loans, debt, etc., 10% goes to your own personal fund. A fund that is not to be touched unless you have a real opportunity to put it to work and make more. Don’t start chasing 100% ROI-type ventures. Safe and slow is the way to go.
The rest 70% you learn to live by. If 70% is not enough, start with saving 5% and giving back 15%. Just start.
Ramit Sethi’s I Will Teach you to be rich
If you have heard of Ramit Sethi, one thing you will know he’s not the one to sugarcoat. His bestseller has already taught hundreds of thousands of people around the globe about credit scores, credit cards and every other small detail about managing finances correctly.
Follow the advice of this book and you will be ahead of 90% of everyone else. Eventually.