How to manage your money so you don’t feel trapped in life (part II)
The five tips that will help you be in control of your money, so you don’t worry constantly about it or feel helpless in case of bad management.
1. Write down your goals by categorising them as:
What you want to achieve in the next month/year, what you want to achieve in the next 2-5 years and what you might want to achieve in the long-term future. Your goals can be for example purchasing a home, getting a new job, opening a business, a marriage, or retiring in peace, and detail these goals as much as possible. When listing your aspirations, give them a timeframe, a probable investment, an order of importance (must-have, nice to have) to organise and clarify them.
2. Review the numbers
Review the numbers and see if you are spending, enabling you put money away for your goals. Subtract income from expenses, the difference between your gross take-home pay and these expenses should be your savings and spending money. Subtract flexible expenses like travel, leisure and dining from the remainder. See how much is left over each month to go towards your goals. If not, you might need to balance the trade-off: Will you reduce variable expenses spending in order to reach your goal? For instance, restart a choice of would you rather give up one vacation a year to be able to afford your dream wedding three years later. But would you rather have your dream overseas adventure or a more intimate wedding day? There is no ‘’one-size-fits all’’, so you will need to make compromises that are right for you.
3. Prioritise saving
Prioritise saving by treating it as paying yourself first. Try and aim to save i.e. 10-15% of your income or whatever is more realistic according to your current economic situation, especially if you are under 30. If you start saving later in life, consider setting aside a higher percentage to catch up and ensure you meet your financial goals.
