Monitoring where your money comes from and goes to is always the first step in better understanding your finances. Poor financial management keeps you in debt and prevents you from reaching your goals. Certain ways enable you to keep track of your money and improve your financial management acumen.
Make a List of Expenses
A list of your expenses helps you better understand exactly where your money is going. Keep track of the essentials like rent, mortgage, food, water, utilities and other similar items so you have an idea of how much you spend, daily, weekly and monthly. Make sure these items are prioritized and must be settled first before spending money on less important items like clothing, dining, or travel.
Once you know what your detailed expenses are it’s easier to make a budget and reduce to build your savings or pay off debt.
Budgeting is the Way to Go
A budget that you follow for weekly and monthly expenses enables you to monitor your expenditures closely. You can resist the urge to go shopping or splurging on a fancy restaurant when you know you need money to pay off debt or handle a major expense from unexpected home repairs, a future operation, or a post-graduate degree.
Your budget will also enable you to determine your spending habits. Your habits will either help you achieve your financial goals like retiring early, buying a house, or sending kids to school, or lead you into a life of unpaid debt a few years before retirement.
Discuss your investment portfolio or other sources of income with a financial consultant. Focus the discussion on increasing your nest egg and diversifying your portfolio. Additional sources of income like stocks, bonds or mutual funds provide you with residual income that you can use along with your savings.
Looking at your portfolio also helps you see which investments are worth keeping and which ones are worth selling or stopping altogether. You might end up losing money by keeping a poorly managed stock or one that is performing badly.
Financial long term planning and management keeps you debt-free or at least keeps debt at a level you can control. This also enables you to find ways to attain other sources of income other than employment. Multiple source of income provides you with more financial flexibility to pursue your dreams.
Consulting a financial expert enables you to make the right decision regarding paying and applying for loans for a house, car or, business endeavour. They also assist you in finding a better option than keeping your money stagnant in a savings account.