5 Steps To Take Control Of Your Finances

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If you depend too much on your salary or undergoing financial disaster, it’s a sign that it’s about time for you to get control of your finances. One of the most vital strategies to achieving that is by monitoring the money you have coming in versus the money you have going out. This is in order for you to be able to create a solid budget – and simply stick to it. Here are the steps that could help you get started.

1. Evaluate your income

Ask yourself how much money you have coming in. Your monthly salary could not be much of the problem. Most people tend to forget other income such as your second or part-time job, any form of financial support or any miscellaneous cash that tend to be overlooked. Add it up and jot it down.

2. Calculate your expenses

Establishing a budget could be complicated when it comes to determining how much money you’re spending. Firstly, you have to write down of all your fixed expenses – which would include rent, mortgage payments, car payments, insurance, utilities, cable etc. Then, don’t forget to include variable expenses such as food, gas, entertainment etc. Last but not least, you should include miscellaneous and maintenance expenses like property taxes, car maintenance etc. Upon adding up your out-going monthly expenses, deduct them from your income – the amount you get will tell you whether or not you’re overspending. This will also help you get a better idea of where you should reduce your expenses.

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3. Reduce unnecessary spending

Now you’ve reached the stage of determining where you should cut your expenses. Evaluating which expenses are actual needs versus wants is a quick way to know areas that you may be able to reduce costs.

4. Set aside savings for emergencies

These modern times, it’s really important to have savings for emergencies. Putting aside an adequate amount of money for savings or emergencies can make a huge difference especially when you’re facing an unexpected job loss or a financial disaster. At least 3 to 6 months’ salary would be an ideal amount that you should have in your emergency fund. If you have not started saving for emergencies, it is always better to begin with a lower amount now than not having at all.

5. Stick to a budget plan

Once you’ve created a solid budget alongside a good financial plan, the problem you may have now is how you should stick to it. It may not be as easy – but once it works out, it is sure worth the efforts you’ve put in. If you have a spouse, work together to make sure both parties are responsible for any spending oversights. In case one of you overspends, set certain rules to make sure proper control takes place. If you’re single, you can still keep your financial matters interesting by finding a support group among your friends or rewarding yourself financially when reaching certain goals. Be it a vacation or even dinners with your friends – it definitely constantly helps keep you reminded of your financial goals.

Read More: http://www.MyFinance.com.my/articles/detail/8112514068

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