Optimizing your personal finances
Optimising your personal finances might sound like a lot bigger picture, but it happens if you work on little things. Spend less, save more, spend only if it’s necessary are all common advice you have grown up hearing. So, let’s talk apart from these usual things.
Save first, pay later:
What we usually do is, as soon as the salary hits our bank account, we start paying all our due bills, buying groceries, do shopping’s and at last, the leftovers are known to be savings. Instead give it a change. There’s this famous rule of saving known as 40-60 ratio. First, set aside the 40% (% might vary little) of your salary as the savings, and the rest 60% you can spend wherever you want. Try this and you will find a lot of differences in a span of a few months.
Backup plan:
Also known as an emergency fund, set aside the basic living expense enough at least for 3 to 4 months, for any emergency. This can help you a lot during a crisis, as well as build a regular habit of saving.
Set up a budget plan
Building a budget plan simply means planning your spending beforehand. When you have a budgeted figure for expenses and savings, you want to get it done right anyhow. In this process, your expenses will follow the priority pattern, meaning that you will prioritise the spending list. What this does is, bring consistency in your monthly savings and expenses and ultimately avoid the haphazard spending.
Invest
What can be the best way other than investing to optimise your finances? No matter how much you save, if you don’t invest, the value of money will constantly decrease due to inflation. Investing might be in the form of shares, stocks, insurance, real estate, gold or any other option available in the market. So, do some research, search the best option for you and invest now.
Alternate Income
Utilising most of the hours available is never harmful. It keeps you busy, makes you mentally happy and cherry on top, makes you extra money. So, if you have enough time that you think can be utilised in some effective ways, you can always go for an additional source of income.
Work on your skills
The better your skills, the better is your value on the market. So, whatever you are good at, always seek for improvement. Sharpen your skills. As they say, “Practice makes a man perfect”, run for that perfection.
Need Vs Want
Last, but the most important, decide between need and want. The needs are the necessities you should not be deprived of, and the wants are the human cravings that are a never-ending process. So, whenever you take out your wallet to pay, ask yourself “Do i need it, or do I want it?”
Shop wisely-Don’t hop for SALE!
Festive seasons are here, and along with it, comes the biggest sale and offer in almost every shopping place, especially on Boxing Day. And the word “SALE” attracts people so magically that we want to buy it all. But it’s rather a bad decision for your finances. Choose the products wisely while shopping, even if there’s a huge sale and offers.
There’s a Japanese term called “Kaizen” which means continuous improvement. To optimise your personal finances, Kaizen is a must. You should be consistent about your change. It might take some time to notice, but it gradually makes a bigger difference. It’s never too late, start optimising your finances.
