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Being able to manage your salary well is not just about trying to make ends meet. It is more about understanding the basics of financial planning in order to manage your spending in a smart way. Now, your plan starts with thinking about what you really want to do with your salary. What goals do you have? Do you want to travel? Buy New Clothing ? Pay rent? Settle bills? Buy a house? or Own a side-business?
Let’s check these few tested ways to help you become more diligent with your salary:
1. Budget before each Salary:
It’s important to have a spending plan for your income before you receive a paycheck. Budgeting helps you stay in control of your money and allows you to keep a track of your expenses. Find out which budgeting method or tool will work best for you. Do you prefer writing it down in a notebook? Or using a budgeting app? Or a spreadsheet.
The 50-30-20 rule is also a great guideline you could use to efficiently budget your savings. Spend 50% of your income on your essential bills, 30% on your financial goals and 20% on flexible spending.
2. Set Realistic Financial Goals
Create a framework for the goals you wish to achieve. You could split your goals into long-term goals such as equity, stocks, and mutual funds and short-term goals such as liquid funds and save your income accordingly. This helps you determine the amount you need to invest for each goal and for how long. Your investment should be in line with what your future financial goals are.
3. Pay Yourself first
Paying yourself first is the process of saving for the future you. When budgeting, it’s important to leave room for your wants to stay on track. Reward yourself with a fancy lunch, dinner or a short vacation when you achieve one of your financial goals!
4. Reduce your costs on these 3 expenses
The three budget areas that make up the bulk of our transportation costs are housing, food, and transportation. Reducing costs in these areas will leave you with extra cash from your salary to save.
5. Set up direct deposit to save automatically
Saving money shouldn’t be a chore. In fact, you can set up automatic transfers and withdrawals from your checking account to your saving or investment accounts.
When considering how to manage money, even the most savvy financial planners will tell you that you have to create room for indulgence in the budget to stay on track. You don’t have to understand everything about money at once, but in order to stay financially secure, you need to keep learning about resources and tools you can take advantage of to keep your finances healthy.
