It wasn’t until my thirty-first birthday that I realized if I didn’t find better ways to manage my finances, I would never attain real financial freedom. Yes, I was getting a decent salary, but I could never really explain how I spent every dime I received.
Near the middle of each month, I would start calling my parents and friends for what I’d call “small loans.” It was frustrating and somewhat embarrassing. I was behind on achieving most of my goals, and I couldn’t help but feel like I had wasted the last three decades of my life. I craved a different, more satisfying life, and I chose to chase it. The first thing I did was to learn practical strategies to manage my money, and I have had no regrets.
If your situation is similar to mine a few years ago, let me give you four tips for sound money management that transformed my life and paved the way for the financial freedom I had pined after for so long.
I never understood why grown-ups took budgeting so seriously until I had to do it. Trust me; it’s the best thing you can do for your finances. Once I started creating budgets, I began to spend my money more responsibly. When doing so, I had to put a few things into account. These included:
- My salary or income
- My household bills
- My monthly expenses/ living costs
- Insurance and all other necessary financial products
- Leisure and travel
- Emergency funds
- The money I gave to family and friends
By considering the things mentioned above, I knew exactly how much I would spend and the amount that would go into my savings account. When creating my budget, I only included things that I needed without necessarily being “mean” to myself. Also, I always stuck to my budget when spending, and it was incredibly helpful.
This is another thing that worked for me when I was getting my financial house in order. By going for affordable items only, I wasn’t spending more than I had to. This meant fattening my savings bank account.
Of course, if you are to buy pocket-friendly stuff, you must invest time in research when searching for a product. For instance, let’s say you are looking to buy a quality high-density foam mattress because you value your sleep as much as your work. How many stores are selling it? Curate a list of the companies and their prices. The place you’ll buy the mattress from should have the lowest price but still offer quality.
Over time, I have learned that saving up for big purchases is prudent. Do you know why? It prevents you from using credit, plus you don’t have to pay interest later on. Additionally, it teaches you discipline and how to sacrifice and delay gratification as you wait for better things in the future. Besides, saving up for a large purchase means that you don’t have to forget some of your needs because you spent your entire salary on one thing that could have waited.
When it comes to money management, goals are critical. It took me a while to comprehend this. The thing is, your financial goals affect how you spend your money. For example, if you plan to buy a home one day, you have to save for that. When you finally close on that house, you’ll forget about paying rent, and that will be a massive expense off your plate. But then, you have to save up first if you want to get there.
Your goals could be short-term or long-term. No matter what they are, prioritize them. They will help you control your spending and learn financial discipline, which is necessary to attain financial freedom.
Successfully managing your finances allows you to accumulate wealth and lead a better life. I would be deceitful if I said that it’s easy; it’s not, especially if you are a beginner. But with time and discipline, you can master how to do it. The tips above worked for me, and they might be what you need to achieve sound money management. Think about them.