4 simple steps to being in control of your money
People of all incomes often find it hard to stay on top of their finances. Whether you’re looking ahead to the future with a specific financial goal in mind or are simply looking to reduce stress by garnering a more thorough understanding of your finances, being in control is a good start.
Here we look at a few actionable tips which can help you become the master of your own finances:
1. Break down your statements
In order to foster an understanding of your finances moving forward, it’s essential that you take a look at your finances as they stand. Not only should you be looking at your balance but also at previous balances and the links between them.
Break down your income and outgoings into a few manageable categories and take stock. Not only is it important to note the disparity between what you spend and what you make, but it’s important to see where your money goes and how often.
2. Set clear goals
The disparity between the money that you make and the money that you spend is really the most important figure to deal with. A strong control of your finances lies in your ability to manipulate this figure.
You’ll need to make a clear decision about what this figure should be, as well as formulating a strategy which will help you to reach the goal.
3. Identify the next step
Once you’ve set yourself a financial goal, it’s time to get there. Not only will this require you to think of ways in which to increase your income but you’ll need to look at decreasing your outgoings as well. The extent to which you do each of these things will of course depend on your goal.
Perhaps the first place you should look when it comes to reducing your outgoings is to the areas where you save money without making compromises. Reducing waste at home when it comes to energy consumption is a good example.
4. Track your progress
Regular reviews are key to staying motivated and checking that you’re on track. Regardless of your goals, using money management tools can make this process a good deal simpler.
If you’re able to track your progress regularly and accurately, you’ll be in a great position to recognise which of the changes are making the greatest difference and capitalise on them accordingly.