So I know what you’re thinking, not another blog about saving money and cutting back on all the fun things in life. Hear me out, this is the complete opposite and you will find out exactly why. I’m going to give you first hand tips that work, and it doesn’t require you to get a second job or to invest. Those steps are when you are more advanced and already managing the income you obtain now. What are those simple steps? Here is a break down and its explanation and a example.
What is my monthly income and expenses?– This is the most important step before trying to save or spend anything you make. Without this knowledge you’re surely bound to run into some barricades financially. If you don’t know what you bring in or take out, how will you know if you are over or under spending? Get acquainted with your monthly income and expenses. Your income should ALWAYS surpass your expenses.
Example: Eric’s monthly income is $1,600 in a 4 week span and $2,000 in a 5 week span, with a weekly pay of $400 after taxes. His expenses needs to be lower than what he makes monthly in order for him to maintain a decent savings plan, to have money to enjoy and for anything else. He also has to watch how he manages his income during that month because not every bill is due on the same date. some are spread throughout different days of the month. Remember that if you get paid weekly or bi weekly, just go by your payments.
Save first spend later- Now that we know what our monthly income and expenses are, it’s time to create a savings plan that fits our needs and budget. If you have a irregular pay period fret not this works just fine. I get paid semi monthly and manage to do well. So lets say all expenses are paid for, lets say you have been doing the previous steps so far, and you can save something extra now. Lets start by setting a savings plan from the amount we have left over, and then manage what we have left over to spend.
Example: So back to Eric, our new friend on his way to the riches. Eric realizes his income a month is $1,600 and his expenses are $1,000 a month. He always has a remainder of $600 left over every month, but he doesn’t know how to even it out between savings and spending. Let’s help him out. Eric should open a savings account if he has one, if not cash is fine but he must make sure it’s being stored somewhere safely, until he can obtain a bank account. He decides to save $350 a month and he keeps $250 for himself. In a year he would save $4,200 alone without interfering with his expenses or fun. Imagine if he decided to save more?
Stick to your savings and budget plan and change ONLY when your income changes– Plan around your plans, which means some days you might receive less or more than what you normally make a month. That is where your savings come in handy, if you’re sticking to it then the change won’t be noticeable negatively. Don’t follow what others are doing until you are SURE you know exactly what you have been doing is working. If you happen to run into some income out of the blue, SAVE it. I rather save a few extra bucks a year, than waste it. Get yourself knowledgeable enough to study saving plans for beginners, saving challenges and all. There are so many, it is impossible for you to hate all of them. Find one that works for you, and stick to it.
Example: Eric makes $1,600 monthly and he receives a bonus holiday check of $800. He saves $600 and keeps $200 for himself. That’s fair game, I’d say. After expenses his $350 already saved plus his bonus $600 now saved, gives him a $1,200 savings balance. Great work!
Learn how to politely say NO- Oh yeah..were going there, the elephant in the room, the one thing most people hate and that is someone who doesn’t know how to manage their income, coming and asking for ours that we planned and worked hard for. So you did everything above, you have been doing it for some months, maybe even a year or more. You are comfortable that you saved 3-6 months of your expenses cause hey, no job or income is guarantee and you need to be prepared for whatever. Then comes along a loved one, that one we all know why they are texting or calling us out of the blue, we’ve helped countless of times..so how can we say no now? Easy..no
Example: Eric has been saving, spending and budgeting properly. He cut back in expenses he didn’t need. He is all set for the month. A close loved one contacts him again for the 5th time this month, with a sad story of once again how he needs some help financially, but he will pay Eric back. Eric being himself wants to help, but he knows that will not indeed help his loved one. So he politely tells his loved one that he can not do it this time, he has all of his finances accounted for the month and if he takes out. He is definitely jeopardizing his future and his families future. Instead he offers to help is friend/family member find a solution to their money situation just as he did for himself years ago. If the friend takes the help great , it benefits both parties. If they don’t then you saved your money from being wasted, and years of hearing “..but I’ll pay you back” this is your life, how you move determines how easy or difficult your next move will be.
Thank you for reading, I hope you learned something from this article. I have been doing these simple steps for some years now, and i can say I am very proud and happy that I made that change and stood with it. If you have any tips please feel free to comment some below, tag a loved one or send this article to someone who needs to read it, call it a financial wake up call.
P.s- if you’re the type of person always borrowing, do not take offense this was sent to you out of love, surely the person who sent it to you wants to see you do much better, show some gratitude and learn and apply. I use to be a borrower, now I only borrow from myself. What I take out I always return plus more.
Life Coach & Content Writing 