Here is a question a lot of people are not asking themselves: are you the one who controls your budget, or is it the other way around: your budget controls you? If the answer to the latter question is „yes”, you do not have to panic. You are probably one of the many individuals who live from one paycheck to the other and have no emergency found, but that is not necessarily a bad thing. How so? Well, at least you are aware of your situation and you are willing to make a change. Fortunately, there are many solutions to your problems. And while some people begin with cutting off expenses that are not mandatory, the ones with ambitious investment plans could even go the extra mile and hire a financial advisor. No matter what you decide to do, the important thing is you taking control of your finance. Here are some smart money moves, so that your situation gets better.
Choose a budget
Think about your needs, preferences, things you buy, emergency costs and long term investments. What do you normally spend the most money for? What are the purchases you could definitely give up? Where do you see yourself in ten years? All these are relevant questions whose answers will help you choose your budget. After many studies, experts have reached the conclusion that there is a popular and sustainable ratio you should implement: 50/30/20. Spend 50 % of your income on necessities, 30% on your wants and the remaining 20% paying debts and savings.
Establish goals and plans
Making plans and reaching goals should definitely help you with your finances, for many reasons. To begin with, this enables you to predict upcoming expenses and accurately calculate what you have left. So, if until now you have been living on the moment, it is high time you started organizing your activities. Break your overall goals into action steps and build some short, mid and long term milestones. For instance, if your goal of the year is to travel to a new destination, invest in your dream monthly by transferring money into a reserves account.
Track your progress
You should check monthly to see how the effort of saving money is going. This will give you a lot of benefits and satisfaction. Firstly, you will find out how much money you managed to save and what the amount you rely on is, in case of emergency. In addition to this, it keeps you motivated, seeing that your sacrifices are delivering results. However, you must keep in mind that budget is not something set in stone, so you must always keep an eye on your accounts.
Do not forget about cash flow
Money come and go, but you must always know when and how this happens. A strong and reliable cash flow will allow you to eliminate (or at least reduce) unexpected bills, while also taking control of money circulation and thus ditch stress. Analyze this plan constantly, make adjustments and build yourself a calendar that you respect diligently.