How to handle your finances the smart way during these difficult times

Do you feel like you are constantly living with the expectation that payroll drops at the end of the month? Never being able to put money aside without really knowing why? Not knowing where your money is going? Rest assured: you are not the only ones struggling to manage your money.

This is certainly one of the most asked questions in the world of personal finance and one that everyone asks themselves one day or another: "How can I take control of my finances?". It’s difficult to give a universal answer because it all depends on your financial situation: are you in debt, unemployed, a big spender, saving a little too cautiously…?

But there is still good news: With the right mindset and a solid strategy in place, anyone can take control of their finances.

Discover 6 ways to take control of your money and regain control over your financial situation.

1. Change your mindset

What are the best things to do when your goal is to grow your bank accounts? Some ideas or tips that have become popular, especially on the internet and social media, may come to mind:

- Reduce costs by stopping buying anything that makes you happy

- Invest in Bitcoin or other cryptocurrencies

- Do online stock market trading (your best friend's cousin has already earned 100 Dollars in just a few hours!)

- Become an influencer on Instagram and sell slimming wraps or detox teas

- Basically, you already know it, but it is sometimes worth repeating: ignore all these techniques (indeed often bordering on scams).

If you don't yet know the secret to instant wealth, there's a good reason: there is no such thing as a "quick fix." But the first step to taking control of your money is much easier than you tend to think: don't ignore your finances, and become aware of your spending.

"Wealth is not how much money you have, but how you use it."

- Paulo Coelho

Changing your mindset is essential for anyone who aims to take charge of their finances. Because unfortunately, your wallet will never manage itself, and as with everything, some effort will be necessary.

You already work hard every week to earn your salary: why not just take a little time each week to take care of it and use it better?

2. Understand where your money goes each month (and adjust)

You can't handle what you can't measure. If you don't have a monthly budget yet, you can start analyzing your expenses as follows:

Take a look at the bank statements for the last 3 months, and categorize each of your expenses on a spreadsheet (Excel type). By “categorize” we mean grouping similar expenses into more general categories (such as “Grocery shopping”, “Clothing and accessories”, “Gifts”, “Gas”, etc.). You won't be able to see how much you spent in cash, but try to approximate the expenses you remember depending on how much you withdraw.

This technique will allow you to obtain an average of your variable expenses over 3 months (those whose amount is not fixed every month, such as shopping).

Be aware that certain annual or more "exceptional" expenses, such as vacations, for example, will not necessarily be taken into account. When you budget for the future, you will need to plan for these categories so you can set aside money for these expenses in advance.

Watch carefully how much you spend in each category. Are there any amounts that jump out at you? Seem too expensive, or too excessive compared to other expenses? Take time to think it over - this is an important step for any new budgeter.

Then you will need to define how much you would ideally like to spend in each of these categories. If you've felt like you're overspending somewhere, set a maximum amount that you don't want to go over each month. The practical question, to establish & follow your budget, several solutions are available to you:

- You can automate this management with budget software

- Or use a spreadsheet like this, which we developed especially for the blog

- If you want to go deeper into managing your money, our Personal Finances Workbook also includes several activities and worksheets to create your budget and track your daily expenses.

This step takes a little thought, but the time spent will be well worth it. In general, the savings are immediate.

3. Automate your personal finances

One of the reasons we often have a hard time setting aside and saving is because we look at it the wrong way. Most people who can't save work like this: they collect their payroll, pay their bills, and spend the month with the goal of spending as little as possible to save the remaining money. next to. The problem with this technique is that usually after all the expenses have been spent, there is… nothing left. Without setting spending limits early in the month, the saving will be much more difficult.

"The rich invest their money and spend what is left. The poor man spends his money and invests what is left."

- Robert Kiyosaki

The spending cascade helps illustrate the ideal way you should allocate your money each month:

4. The Cascade of Expenses

With that pattern in mind, this is where automation comes into play. Having to manually set aside money each month is certainly not ideal and opens the door to failure (forgetting to make the transfer, ultimately deciding to change the amount at the last minute, etc.)

By automating this operation (which is now very easily done online on your bank's portal or app), everything becomes much easier.

Use the 50/30/20 budget template to define how much money you should set aside each month for your savings goals. Here is a diagram to guide you:

Schedule a direct deposit in an amount equal to 20% of your salary.

5. Invest in your future

It's hard to put money aside, grow your money, and build your future while sleeping in a checking account. Your goal should be to make your money work for you through investing. The problem is, investing scares many people. Yet without it, you will never be able to really put your money to good use.

If you are just starting out, keep in mind that investing does not mean putting thousands of euros in stocks. There are several solutions for investing your money in very accessible investments, such as employee savings plans which are still too little used today.

6. Increase your income

This is one of the most common psychological barriers that prevent people from getting rich: believing that there is a limit to the money you can make and that you are completely dependent on how much you pay.

But there are actually plenty of ways to increase your income and make more money every month. And to become financially independent, it is difficult to depend only on your salary.

This is one of the ideas developed by Robert Kiyosaki in his book rich father, poor father: being an employee and having as your sole source of income is actually much riskier than one thinks (more salary in the event of dismissal, difficulty in increasing income or obtaining a raise, etc.)

Investing, which we discussed above, is one of the most classic methods of increasing income. But many other forms of passive income also exist.

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