Manage your money well so that you don’t have to compromise your lifestyle
Maintaining control over your income, expenses, and investments in order to achieve your ambitions and dreams is wonderful, but you’ll need enough money to do so. This is where financial planning comes in to help you realize your mid and long-term goals.
- Keep track of your expenses so you can cut costs and increase your savings
- Manage your money well so that you don’t have to compromise your lifestyle.
- Honestly, for the peace of mind that comes with financial security you need a good budget.
How to create a financial plan
Create a budget: It’s usually a good idea to know why you’re putting money aside, set goals and then make a budget by considering your monthly cash flow, as well as your savings and investment strategy. Allow yourself to make decisions about how and where you spend your money. Whatever you choose just ensure there’s a budget so that you’re aware of your limit.
Put money aside for emergencies: Unforeseen expenses can really be heart breaking right? Assuming you’re completely broke and there’s a departmental fee out of the blue or you need to fix your phone as soon as possible and your parents or guardian can’t send the needed fees or they send part of it. What do you do then? If you aren’t financially prepared, no amount of planning will help. An emergency money comes in handy in this situation to keep you afloat in that moment of need.
Start making investments: It’s never too early if you have long-term financial ambitions, investing in mutual funds at an early age will give you a significant advantage. The sooner you begin investing, the more disciplined you will be in your later years.
Step by step tips to make a budget
Calculate your net income: Your parents may provide you a monthly allowance. You may also be taking a part-time job or an internship while in college to help pay for your education and cover living expenses. The amount of money you bring in each month is an important aspect of your budget since it determines the limit on how much you can spend.
The next step is to make a list of all of your monthly expenses: Some of the most typical college-related costs includes supplies for lectures, rent if you’re staying off campus, Food, and Groceries. Travel, gym memberships, subscriptions for phone, internet, and monthly streaming. Utilities such as electricity, water and gas, Transportation. Miscellaneous such as gifts, entertainment and apparel.
Organize your expenses into fixed and variable categories: Fixed expenses are bills that you can’t avoid and must pay while variable expenses, on the other hand, are more flexible and frequently contain wants. If your income drops, you can always cancel your gym membership, postpone a vacation, or cut back on your takeaway spending without too much of a negative impact. However, you’ll almost certainly always have to pay for rent/room and transportation.
Estimate the monthly average cost of each expense: Make a note of how much you spend per month on each expense. Many of your fixed expenses will be consistent from month to month, making it simple to calculate the cost. However, if you rent an apartment off campus and pay for utilities like electricity and gas, the cost can fluctuate from month to month. You’ll need to do some math to figure out the average monthly cost for any categories where your spending varies from month to month.
Make adjustments: The final stage in your budgeting process is to review all of the data you’ve collected and double-check that the figures add up. Check your net income in relation to your monthly spending to see if you have enough money coming in to meet all of your expenses each month. It’s time to make changes if you can’t afford your current lifestyle. While you should think about ways to make more money, you should also explore strategies to save money.