5 Tips to Keep Your Financial Situation from Being a Burden
Your financial situation is a subject that often takes on disproportionate importance. We all know that there are more important things in life. However, when you get to the end of the month and it’s time to pay the bills, you don’t have a lot of options. You pay, or you pay. If your bills at the end of the month aren’t a problem, sometimes the issue is wanting something that seems very difficult to get. No matter how hard you try, you aren’t any closer to achieving your goal. You try to stretch your money, but it doesn’t work.
“If you wish to make Pythocles rich, do not add to his store of money, but subtract from his desires.”
Of course, there are always cases of people who buy whatever they want and are always on the verge of bankruptcy. There are very few people who never really worry about money. Money is an unavoidable subject and sometimes it’s hard to relax if you have money worries.
The amount of money you have isn’t what causes the problem. The crucial component is how you manage your money. You will only feel better if you are in control of your financial situation. You can always be more in control of your financial situation. Here are five ways to make that happen.
1. Saving – the foundation of stable finances
It’s hard to talk about saving in a time of extreme consumerism. In fact, people don’t think so much anymore about what your assets are. Instead, they want to know about your consumption capacity. We are bombarded by sales, offers, and calls all the time, trying to get us to spend money.
Saving is basically a habit that is crucial for a stable financial situation. Economists say you should save 10% of your income. If you get it into your head that 10% never belongs to you, that it is a tax that you have to pay, saving should be easy. You shouldn’t spend that money for at least a year. You will be surprised at how easy it is to achieve what you want and that you will always come out on top.
2. Have an emergency fund
So often, stable finances go down the drain as soon as some unexpected expense comes along. Damage to your home, an illness, or an emergency trip are some of the most common surprises.
This is why it’s important to set up and maintain an emergency fund. Again, economists say that the right amount for an emergency is 5% of your income. You should also act like this money doesn’t belong to you. Consider it a debt for your well-being that you have to pay month-to-month.
3. Guarantee your social security
This is a step that is especially important for young people. When you are young, old-age seems non-existent. But it does exist, and eventually, it will arrive in full-force. When it comes, you will be in a vulnerable position.
These days, not all jobs offer social security. If this applies to you you should invest in some kind of fund or have an additional savings account for retirement. The recommended amount for this account is 15% of your income. More, if possible. Having resources at the end of your life is priceless.
4. Create a monthly budget
For a stable financial situation, you have a monthly budget. It is extremely important to know how much money you have and how much you spend, especially if you don’t have a fixed income. Keeping track of your spending can be somewhat depressing, but it is absolutely necessary.
Based on what we’ve already said, you should always hold back 30% of your monthly income. The rest is what you actually have available for expenses. This might seem like a lot, but it’s really just a question of habit. We know that sometimes your income increases, but it’s often still not enough to pay for everything. This is because you aren’t sticking to your budget.
5. Don’t buy compulsively
Let’s go back to the beginning of this article – we live in an environment that tries to get us to spend constantly. Many advertisements are designed to encourage consumers to buy impulsively. That’s why they have flashy and attractive ads. They want to overcome your willpower.
Without realizing it, you often end up buying things that you really don’t need. What’s worse, they might even be things you don’t want. When you can’t resist the 70% discount on that pair of shoes, new TV or the latest cell phone ask yourself if you really need it.
Though you might not think so, money has a lot to do with psychology and organization. The meaning, use, and consequences of money are more in your mind than in objective reality. A stable financial situation is important for a tranquil life. You may have to make a few adjustments so that money issues don’t keep you up at night. Start now!