Money makes the world go round so ergo, a lack or mismanagement of finances can make your world stop.

When you take steps to simplify how you manage your financial situation, you start being proactive with your money, and it becomes so much easier to deal with on a daily basis.

Think before you spend

As trivial as this may seem, when you’re faced with a spending decision, especially a large purchase decision, don’t just assume you can afford something. Confirm that you can actually afford it and that you haven’t already committed those funds to another expense.

If you can’t buy something five times over, you probably can’t afford it.

Remember that just because the money is there doesn’t mean you can make the buy.

Track your spending

Start writing down every kobo you spend for 30 days. Once you do that, you start getting the feel for what you’re spending on everything, then you can begin a monthly budget.

Make a budget

Once you have an idea of what you spend in a month, you can begin to organise your recorded expenses into a workable budget.

Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance.

Instead of focusing on the process of creating a budget, focus on the value that budgeting will bring to your life.

Savings

One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for.

Here are some examples of short- and long-term goals:

Short-term (1–3 years)

Emergency fund (3–9 months of living expenses, just in case)

Vacation

Down payment for a car

Long-term (4+ years)

Retirement

Your child’s education

Down payment on a home or a remodeling project

If you’re saving for retirement or your child’s education, consider putting that money into an investment account.

While investments come with risks and can lose money, they also create the opportunity for compounded returns if you plan for an event far in advance.

Build an emergency fund

When you have money set aside for emergencies, you’re not tempted to go into credit card or other debt to deal with it.

Everybody has the occasional emergency, and if you are already prepared when it comes, that’s one less thing you will have to worry about in a time of crisis, and you won’t have to spend months or years paying it off.

If you’re married, have a joint account

If you’re married, there shouldn’t be “his” money and “her” money or “his” bills and “her” bills. All of it belongs to both of you.

So always deposit all of the money into one central checking account and distribute it from there. Doing that fosters good communication and, along with a budget agreed on by both of you, will eliminate money fights.



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