To take control of your personal finance you need a complete knowledge of how to coordinate all areas that deal with financial management. The absence of personal finance management could ruin an individual’s financial growth.
For most individuals, making income could be very painstaking and demanding. Struggling with office activities or hustling to make business ends meet.
With those overwhelming periods at the end of the month, you receive a monthly payment that leaves you with an option to take control of your personal finance. Many times monthly earnings may become challenging to manage, as many budgets are already seeking attention.
While the individual who engages in buying and selling in the business of calculating profit and losses, still finds it difficult to deal with financial issues.
As they are the people who are likely to spend days as the money comes occasionally. Therefore, they may experience shock on realising a high rate in expenses.
Moreover, whether the income comes on a daily or monthly basis or you are in the corporate or business sector. Whichever way, you are still responsible for taking the best control of your personal finances.
You could start by understanding and taking into account your overall monetary inflow. You might have so many investing and passive ways of income flow but you need to understand what comes in from them.
This is the first step in trying to take control of your personal finance. Once you miss this first step, you are likely to get it wrong in the next step. It is very important to be in charge and control your overall monetary activities.
You can apply many techniques but the following ways are the most important.
How to take control of your personal finance
Get literate in personal finance matters
How do you feel enjoying a delicious meal, you do not know how to cook? Quite all right, you may hire someone to cook it or better still purchase it. However, it is best to understand how to cook it so you can enjoy it as often as you want.
So also, how do you take better control of your personal finances when you are not literate in financial matters? You might hire and pay for a financial adviser but it could be better if you gain the knowledge. Being financially literate could help you control your financial activities.
You can do this in many ways, reading books on personal finance, could help you understand where to start. Those books will enlighten you more on savings, getting out of debt finding ways of earning more income and monitoring your expenses.
There are many of those books online or you can choose to get them at your local library. You can as well meet experts who will educate you and you learn from them as a course. The main idea is trying to control your personal finance yourself.
Monitor your financial progress
It is backing your knowledge of personal finance with regular up-to-date of your financial report. With this report, you can decide on your next plan.
Your next plan could be tracking the level of your financial inflow to help you determine the rate of your spending. For instance, making a budget that aligns with your income is an indication that you understand your personal finance too well.
Again, get in touch with your debtors if any, and establish a follow-up with them on payment. Finally, when you decide to take a loan, ensure it is for a specific project that will yield returns.
Cut down unnecessary expenses
Sometimes you may not be able to avoid some expenses. Even as you try to cut it down the fact remains that you need it that much. A fixed expense is an instance of such expense.
In the same vein, there are other expenses, you may try to avoid but it may take a hard time to do. Most expenses are generated through personal desire, and you cut such down.
For instance, you could cut down on entertainment, clothing, buying assorted groceries, high electricity, and cable subscription. While you still maintain fixed expenses such as rent, security, and car fueling.
Save no matter how much
Most income earners usually find it difficult to set aside some part of their income. It sometimes happens resulting from low payment in monthly salary. This is why you must learn to cut down on expenses.
Flora who works in a company said even if she saves, she still has to borrow money from a friend, which is equal to the amount she saves.
Therefore, in her case the option of saving is void. When it becomes difficult to save from monthly pay, the need for a passive income becomes necessary.
A passive income could help her solve that aspect she usually borrows from a friend. It is very important to save because it grants you security in emergencies. It gives you hope of something to rely on when the present means of income stops.
Budget before spending
Making a budget for every spending is one way of taking accurate reports of your income and expenditure. Creating a budget enables you to find out if your available balance can solve all items in your list. Your available balance determines the progress or regress of your overall income.Â
Therefore, your budget cannot exceed what you have. If it exceeds it means you will resort to borrowing. The best formula to resolve this is to cut down on your budgets, and while doing so set priories on the relevant items.
The benefits in controlling your finances
- It helps you to understand and make decisions that promote your financial growth: You will be able to understand your cash inflow and device a means of allocating them to your desired channels.
- It informs you of the need to accumulate more finance through other means like investing: A complete knowledge of your finance will notify you when you are progressing and then the need to divert the surplus to a channel that will bring in more revenue. Also when you are regressing to find a means of preventing further loss
3. It gives you knowledge of your financial net worth: Since you are the one handing your monetary affairs, you will understand how large or small your assets and liabilities have either increased or decreased. The summary of your financial capacity.
4. Taking control of your personal finance helps you become part of your finance, as this will enable you to know when your source of income is downsizing.
The bottom line
Taking the best control of your personal finance might not necessarily need you to hire a personal finance advisor. Most people might not want to share their financial secrets or let others make decisions on their business. Getting a personal finance advisor is a good thing, especially a professional you trust.
However, the best way out lies in the need for you to get literate on financial issues, doing this will enable you to handle your personal finance accurately and alone. Even if you hire someone it will help, you understand when the person is getting it wrong because no one is perfect.
Therefore when you decide to take it all by yourself and get literate on financial matters. We advise you to seek solace and take reflection on the above write-ups and see yourself making progress in handling your financial activities.
Hope this article was helpful
