Good financial management is one of the toughest things a lot of people try to learn and master. But with a little effort and commitment, it shouldn’t be that complicated.
Essentially, you must understand and practice how to be a minimalist without necessarily having to become a recluse or depriving yourself of the good things of life. It’s more about how you’re able to simply and set up a smart and stress-free financial structure that helps you focus on what is important and secure your future.
Below are guidelines that set you on the path of this objective.
Focus on your need, not wants
By nature, we want more and too often get into a habit of splurging on impulse buys, shopping for pleasure, and looking to purchase items that boost our status or ego. This can lead to living in a house full of things that aren’t essential, and that we’ll eventually have to learn organize or get rid of.
This is a mindset that evolves from years of constant exposure to advertising; and it isn’t a habit that’s easy to stop. To work yourself out of this financial-limiting attitude, make a conscious effort to always differentiate between what you need and what you want or that’s more of a money-guzzling luxury. Focus your spending budget on your need.
Save for an emergency fun
Setting aside an emergency fund will give you a peace of mind, otherwise you’ll live constantly live on the edge, from income to income and month to month.
As the name implies, an emergency fund takes care of unexpected expenses (and they’ll come every now and then) and ensures your financial goals are not derailed.
So, start today setting aside a substantial buffer fund and slowly build it until you’re able to double or triple the sum. To achieve this objective, you’ll have to cut out unnecessary spending and periodic payments that’s become a routine but falls into your ‘want’ category. This list could include anything from magazine subscription, to cable TV, buying books that are readily available in the library, a bigger car, a bigger home et cetera.
Track your spending
if you can, carry a notebook or use a phone app that helps you track your spending.
One smart mobile tool is the B money-saving app, which helps you with great budgeting functions and lets you know when it’s a good time to spend or save money. The B app helps you see where your money goes, stay on your financial target, makes savings look less than a chore.
With limited practice, tracking your spending helps you develop a positive money attitude and avoid impulse spending.
Ditch the credit card, use cash instead
Credit cards are good, but only when you have financial discipline. More often, credit cards create a dent on people’s finances because they spur a habit of spending money that technically doesn’t belong to the holder and therefore keep them in debt.
It’s possible to use credit cards responsibly, but in most cases, they’re a huge temptation. It’s easier to have spending control with physical cash or debit cards, which represent money you actually own and don’t have to pay or accumulate interest on.
I know from experience that having an emergency fund has done wonders for us. We are mostly a commission based income home so having that emergency fund really takes away unwanted stress. We tend to save up at least 6 months worth just in case something happens. We need to work on our budgeting practices. We have gotten better about shopping for needs instead of wants but we have some room for improvement. I will have to check out that app you recommended. Thanks for sharing.