Guidelines for controlling your personal finance
Most people do not have enough money in their bank account to meet the unforeseen expenses that may arise in the future. You need to evaluate the ways you could manage the money. Savings is very much important as it helps in preventing you from borrowing or taking loans with high-interest rate to cover the expenses. This will only damage the bank balance further. Below mentioned are a few steps which will help in getting control on your finances.
Steps to follow
Evaluate the income- You need to know about the money coming in. You should not forget other income apart from your regular paycheck like trading income, rental income, etc. Online trading is a great way to earn money without stepping out of the home and it can be easily done along with your current job. Find out more about it here. Make a note of all the income and add it to get the final figure.
Calculate the expenses- The most difficult step in making a budget is determining the money spent by you. Make a list of fixed expenses like rent, car payments, insurance, mortgage payments, utilities, child care expenses, other subscriptions expenses and so on. Next, you need to include the variable expenses like gas, entertainment, food, etc. After noting down the expenses, deduct this amount from the income amount and you will know whether you are saving or spending more money than you earn.
Cut down on unnecessary items- You need to find out how you could cut down on the current expenses. For instance, you could check around to find out if any other cable service company is offering the service at lesser cost, check out if other banks are offering a lower rate of interest so that you could transfer your mortgage loan, etc.
Keep an emergency fund- In today’s world; it is very much important to have an emergency fund. Keeping aside money in an emergency fund will help in case there is an unexpected job loss or if there is any other financial emergency. You need to have at least 3 to 6 months of your salary in your emergency fund.
Save for future- After setting aside money for the emergency fund, you also need to start saving for future. Keep aside some amount of money every month to meet the financial requirements that arise in the future. It could be your children’s education, marriage, money for retirement years and so on.