Photo by Kelly Sikkema on Unsplash
It’s no secret that money is a big part of our lives. Managing money while making good financial decisions is important so that you won’t struggle at the end of the month. Now the big question is, how do inexperienced youngsters like us learn to not struggle financially?
Budgeting & Not Over Spending
Remember that everything you spend will decide how bitterly you’re going to live at the end of the month, so be very wise on how you spend your money. One of the methods that will save you from running out of money would be the 5:3:2 rule. Split the money that you’ve obtained within a month into 3 parts. 50% goes into your survival, the must haves. 30% goes into entertainment, this is where you treat yourself. The remaining 20% goes into your savings account. Another tip to be mindful of your finances, would be switching to cash. Limit yourself on how much you can spend every week. This will allow you to be effective on planning how to survive with your current cash status.
Tracking
Keep your receipts and calculate them at the end of the month to keep track of all the money you’ve spent. This will also allow you to re-think the value of the items you’ve spent on. Take note of what you did great and what you didn’t so it won’t be repeated in the following months. Some people might not like to calculate since it may come across as a hassle. A money manager app would be perfect for them to solve this issue! All you need to do is key in the amount of money spent. This way, the app will do all the calculations and notify you when your spending habits exceeds budget.
Having A Savings Account
A great birthday present that I’d suggest everyone to get for themselves would be opening a savings account. (Note: You can only open your own personal savings account at the age of 18.) Keeping your money in a bank is one of the safest ways as it is being taken care of by a third-party. Also, with a savings account, paying bills are much easier. All banks have different benefits so make sure you conduct research on a bank that best suits you. Do keep in mind that different banks have different interest rates depending on what account you plan to open.
Reading A Finance Related Book
Reading a book might be boring sometimes, but if it’s beneficial for you then it should be interesting. After all, knowledge is power. Reading a finance book may help you understand the angles and perspectives of finance better. Books on this topic will allow you to change your perspective on how you value your assets and money. Also, a finance book will teach you how to outsmart your own money and on top of that you’ll be able to learn how to use or make money wisely. Anyone can manage their money, but gaining financial knowledge is the key and financial books are there to help you.
To help your own financial status, start by investing in your mind and put it to work. Don’t stress about finance. Instead, practice and improve it. It’s a trial and error process throughout the years of earning and spending your own money. Learn from your mistakes and overcome the obstacles through this journey of coping with your finances.
By: Kai Wen