Majority of the people do not know how to manage their personal finances and stay out of debt. It is quite regrettable that basic financial tips that can make people financially literate aren’t taught in schools.
If you want to learn how to manage your finances, there are important things you must understand. These financial tips have been put together to help manage your money and stay out debt.
Learn how to budget your income
A budget is a plan for the coordination of your expenses. The reason many Nigerians are in debts is because they spend more than they earn each month. If you want to be financially free, make sure that your monthly spending doesn’t exceed your disposable income. You can do it the traditional way by using pencil and paper or download some budgeting apps like Piggyvest, GoodBudget, etc.
Calculate your monthly income. Any money that you receive regularly is considered to be your monthly income.
Take a look at your expenses in the last three months to help you know the categories you typically spend money on.
Make a list of the categories you spend money on monthly such as groceries, data, utility bills, etc. do not forget to add the irregular bills you spend money on bimonthly, biannually or annually such as rent, maintenance of your car, etc.
Track your spending to help you understand how you spend and what categories take the larger share of your income.
Learn to save
Unfortunately, saving is not a habit that many people inculcate. To be able to save, you must be self disciplined to stop impulsive spending. Although purchasing an item that you wish to have on credit may not seem like a big deal, it is better to wait and save up before buying it. If you’re in the habit of purchasing items on credit, you might end up with the lifestyle of paying for debts every time.
Instead of borrowing money to purchase an item, you can save up for it. For example, instead of borrowing to buy a car, you can set a savings goal to help you achieve your aim. This will save you from the payment of interests and other disadvantages that come with borrowing money. Delaying gratification will help you be financially responsible.
Invest
This is a very important financial tip. While saving is a good idea, investing is a great idea! Investing allows your money to grow significantly with compound interest. It helps you grow your money consistently.
You should determine how to invest your money and where you want to invest it. You can invest in stocks, treasury bills, real estate investment trusts (REITs), side businesses etc. There are many books that you can read to help you understand how to invest.
Track your net worth
Another financial tip that some people overlook. Simply put, your net worth is the value of assets you own minus your liabilities. It is the measure of your wealth. To calculate your net worth, add up a total value of all your assets, add up a total value of all your liabilities and subtract your total liabilities from your total assets. It is important to know your net worth because it helps you to understand where you stand financially, identify the areas where you overspend and helps you reduce debts.
Have an emergency fund
Nobody likes to be caught unaware by expenses that they didn’t plan for, but it is inevitable. Having money that is set aside for emergencies will save you from financial trouble. Many financial experts say that it is best to save up three months worth of your salary in your emergency fund.
Congratulations! You have just learned smart financial tips to help you become financially independent. However, it doesn’t stop here. There are many books written by financial experts to guide you through your financial journey. Make a decision to take your finances seriously today.
Which of the financial tips have you been practicing?
WHAT PROPERTYDOME OFFERS
We are an information rich platform that connects property buyers and renters with developers, agencies and agents for the best property deals. Do you want to buy or rent properties? Please subscribe to get information on the best fit for property in your inbox. We will also be sharing valuable real estate and lifestyle content weekly with you at no cost.
Do you have questions or ideas on how we can serve you better? Please contact us today
