We are going through uncertain times economically. personal-finance is the science of handling money.The global and local economy has seen better days. For the vast majority, income will remain fixed (or dwindle) while prices of goods and services may fluctuate. It is therefore important to manage one’s income prudently.
Below are five tips on how to manage personal finance during the uncertain times in which we find ourselves.
- Budget before you receive your income
This cannot be over emphasized. Do not wait for your salary, business revenue or rental income to hit the bank before you make a budget. A Budget made before income is received usually reflects more needs and less wants. When income is received, it is easy to misuse funds.
- Budget for an allowance to spend on yourself
It often happens that when we see an item we want, but do not need, we convince ourselves that we work too hard to solely pay bills. Therefore, it is important to allocate each month, an allowance of how much you will spend on yourself. If you find an item you wish to purchase which is double your monthly allocation, negotiate for a two-month payment plan. Set a monthly amount and stick to it.
- Deal with costly habits
Take time to audit habits that are costing you money. Are you buying takeaway often instead of cooking? Are you borrowing money to buy things you can live without e.g. designer shoes, bags etc.? Some habits can be costly. Admit that you have costly habits, write them down, create strategies for dealing with them and commit to creating pocket friendly habits.
- Postpone spending
If a sales person compels you to buy an item because it is the best deal you will ever find in your life- if that item was not on your budget, postpone the decision till the following day. There is no harm in asking them to give you a day to make the decision. Most of the time, you will realize that you do not need the item at all. This will save you a great deal.
Times might be hard but endeavor to allocate an amount to saving. This amount might be significantly less than the ordinary amount you save per month. However, save it anyway because, small amount build up over time and have the potential to save you on a rainy day.
Beyond Financial Literacy week 2020, let us aim to prudently manage our personal finances. Be money smart to live a better life.