Managing money is not an easy task. For the past two years, my yearly resolutions have been ‘reaching my personal finance goals.’ Has it been easy? Hell no, but I found simple ways, which have helped keep my finances in order. So, I will be sharing some tips on how to manage your finances, especially in your 20s and 30s.
1. Know What You Need
Most of us run out of cash because we buy things we don’t need. Conditioning our minds to resist these wants will help manage our personal finances. Let’s assume you have two pairs of brown slippers, and your church mind is telling you to buy another brown slipper. No, Sis, this right here is wrong. Why do you need another brown slipper when you already have two of it? Think!
2. Save Before You Spend
This is the genesis of everything. It is advisable to save at least 20% of your stipend/income. However, with the recent increase in food prices in the country, I would suggest saving at least 15% of your monthly wage or salary. Saving and Investment Applications like Cowrywise and Piggyvest help in managing finances. They are easy to use, and they encourage financial self-discipline by locking your funds. Once you save on these apps, you cannot withdraw the money until your specified maturity date. If you wish to invest, invest before you spend, but be mindful of your investment.
3. Make a Budget:
Planning is at the forefront of managing finances. How do you plan? It’s simply by making monthly budgets and sticking to them. Making a list of things you need for the month will help discipline your spending habits and in turn, increase your chances of saving more at the end of the month. Here is a list of things I include in my monthly budget: Food, Transportation/Logistics, Emergency Money/Medicals (often 10% of monthly allowance/salary), Flex/Miscellaneous (3% – 5% of monthly allowance/salary), and Self-Care (Toiletries mostly and hair making). Your monthly 95% of your budget should reflect your needs and not wants. Also, I make sure that my monthly expenses/budget doesn’t exceed 70% of my cash inflow.
4. Audit your cash flow
One important tip to managing finances is by auditing your cash flow. This simply means keeping track of what goes out and into your account. Don’t spend more than you earn or receive. I know sometimes life happens (uncontrollably events), and you get to spend more than your budget. Well, that’s okay, but these issues don’t happen all the time, or do they? It is important to audit your account statements/transaction history once in a while to know if you have been spending more than you earn. Auditing your cash flow also helps you know if you can afford to buy a particular item at the moment or not.
5. Have Two Bank Accounts
Two bank accounts are necessary to keep your expenses in check. Don’t mix your savings with your upkeep allowance because of some financial dangers. Differentiate your savings account from your expense account to curb the temptation of dipping into your savings.
Ps: I am not a financial expert, but these tips have helped me put my finances in check.
Thanks for reading and share! You may also like tips on how to discover your personal style.