If you have had money problems; sure you wonder how to improve finances in the home to avoid economic emergencies
When you become independent you observe how complicated it is to organize all your money; to give you up and you can do everything you want; Something similar also happens when it comes to organizing the finances of the family, so here’s how to improve finances at home .
The moment we start earning money for the first time, whether it’s a summer job or your first part-time job; In short, whatever the origin of your first income, I know for sure that it did not come with instructions to administer it correctly.
Yes, it is that no one begins to win and receives instructions on how to manage the money correctly; If you had parents with good habits, you probably started saving from your first ones; but if your case is the opposite then surely years later you have suffered the consequences of carrying bad finances.
Is it possible to learn to carry good finances?
Nobody is born with the skills of a good administrator and it is not something that we study in school (although it is necessary); That’s why when we reach adulthood we hope to have or acquire sufficient skills to manage our finances properly. This is something we take for granted and that is why very few people ask themselves how to do it well?
Not being able to carry our personal finances well can make us feel frustration, guilt, anger, shame and disappointment; however, this may change when learning to administer. To achieve the skills of a good administrator; It is necessary to learn as when you learn to drive or play a musical instrument. The best part of the case is that it is never too late to learn.
So yes it is possible to learn to live without debts and make the payment of all the expenses that we have. Because it does not matter how much money you earn, but how you use it; That is why, in order to have a good administration, it is not necessary to find a magic formula or obtain other income.
How to improve household finances
Before giving you a guide on how to learn how to manage your money properly, you need to answer these questions; in order to realize how committed you are to the good management of your money
- How much do you strive to carry your finances correctly?
- Do you keep track of what you spend per day, weekly or monthly?
- How many times have you regretted spending a lot of money on something that was not worth much?
Now that you have in mind how you currently carry your finances, let’s talk about the tips you should take to bring good finances at home.
Step 1: Set goals
Before you can take good management of your money, it is necessary to identify what is important to you; in this way you will have an end to know what to do with your money. So you can write a list with your goals and another with the way you can use your money to achieve it; Check this example:
- Live without economic worries
- Buy a house
- Make a good vacation trip
- Pay for the education of the children
- Buy a car
- Start a business
- Pay the debts of your credit cards
- Save 3 months of rent for emergencies
- Have a savings fund, for when we want to take a long break from work
- Save enough in one account to be able to acquire good credit for a house or a car
These goals should not be a martyrdom for you, the short-term goals like paying off your credit card debts or other more than you have; In this way, as you fulfill your short-term goals, you will have more resources to finish with your long-term goals.
Raising your goals is the first step to know how to improve finances in the home ; for you yourself forge the goals for yourself based on what is most important. Many of the money problems that many people go through are because they are not clear enough what they want to do with their money; wasting money on superfluous things that will not give you any benefit.
Step 2: Identify your income and expenses
Learning how to improve finances in the home is about keeping a good control of the income of the family; and how those revenues are spent. When we manage our own money we are likely to adopt financial habits easily; Many of them can be good habits and others can truly affect our economy.
So make a list with all the income you receive, as well as all expenses; will help you recognize which habits are affecting your economy. Maybe it can be a bit complicated, because most people know very well how much they perceive; but not exactly what they spend it on. So in your record you must write down everything you spend: food, tickets, payments, etc.
Track each expense
To be completely sure of how all the family’s income is spent, a record must be taken of each one of the expenses that they make; at least for 2 or 3 months in a row. This should not be too complicated a process; just a notebook and a pen, as well as a time each day to record all the expenses that are made every day.
It is important that you do not advance to register your expenses, that is to say, do not write down the expenses that you will have in the fortnight only because you know in what you will spend it; This will knock out your registration and it is likely that you may have more expenses than income.
Step 3: Separate your needs from your wishes
Usually when people make a record of all their expenses they realize that a lot of their money is spent on things they do not really need; they are things that are bought in a moment of impulse.
People tend to make impulsive purchases for a variety of reasons; For example, if we are in a good mood, we usually spend on something to maintain that good mood; and the same thing we do if the opposite happens and we feel a little discouraged.
Some other people feel compelled to make certain expenses when they have not planned them; for example in an outing with colleagues at work, or on a vacation with the family.
Impulsive purchases are usually associated with a high level of stress; Having a low level of stress can lead to impulsive spending; But if the level of stress is too high can alter our ability to make wise decisions when it comes to our expenses.
So the key to avoiding these impulsive purchases to learn how to improve finances at home is to separate our needs from our desires. If you are not sure what kind of expenses are a real need; try to live without these expenses for a couple of months, if this is impossible for you, then it is a necessity expense.
However, many of the expenses that we can consider a need are mixed with unnecessary expenses; that is, you may be spending more than you owe on transportation to work just because you want to be more comfortable. That’s why if you usually take a cab or uber to get to your work; plan to sacrifice that little luxury to save on your daily expenses.
Step 4: Design your budget
Many people do not like the idea of having a budget because they believe it means having many limitations or depriving themselves of many other things in order to save money. While a budget is about reducing some expenses; It is very necessary to know how to improve finances in the home .
In spite of how complicated it can be for you to establish a budget , this is completely necessary to succeed in carrying out step 1, where we talk about our financial goals. In the same way before starting to establish a budget, it is necessary to make sure that your expenses are not exceeding your income.
By reviewing your list of expenses you can begin to make reductions in them in order to achieve your financial goals; For example, if you tend to spend on food daily, you’d better try taking food from home; so that this expense decreases.
Protect yourself against a financial disaster, make a savings fund
If in these moments you are going through bad financial times and that is why you are looking for how to improve finances in the home ; then having a savings fund will allow you to get out of these troubles. Because even during the time of economic stumbling it is important to always save a small amount.
People who usually have an emergency fund, which allows them to pay their expenses or cover some emergencies; they do not need to resort to credit cards to cover these expenses, which means that they do not acquire debts that they can not cover later.
An emergency fund should cover your most basic housing expenses in case your income shows any change; for example, in case of losing a job, while you get work, your expenses will continue; for this, the emergency fund is necessary.
Although there is no fixed amount that you should save monthly since everything depends on your income and characteristics (if you have debts, if you are pensioned, what are your goals, etc); You must establish a possible amount of savings in your budget. At first you will find something very complicated, but as time passes you can save without problem.
Step 5: Put your plan into action
If you want to know how to improve finances at home, it is best that you follow these steps very well that we are showing you so far. Once you defined your goals, reviewed your income and expenses, determined the amount of savings for your emergency fund; It’s time to put your plan into action.
Now you must design a payment plan; For example, if you have expenses that are biweekly, then do it biweekly or monthly; The goal is to accommodate your payments according to the date.
In your payment plan you must write down all your expenses, the date in which they must be covered, as well as the amount that is destined. Also if you need to have money that you have in your bank account, you must first write it down as extra income; this way there will be a good balance between your income and expenses.
What if I do not have a fixed income?
Not everyone has a fixed job, as many people have seasonal jobs or are entrepreneurs; However, if you do not have a fixed income, it does not mean that you can not establish a budget; This simply means that you should pay more attention to planning.
If you have been receiving irregular income for several years, then you have a rough idea of what you can have each year; This approximate amount should be divided in 12 months, to have an approximate amount of what you will have available each month to program your expenses.
Another way to manage irregular income is to deposit them all in the same account; and go only taking a monthly amount. Analyze very well the monthly expenses you have and determine a fixed amount to establish a budget.
Step 6: Manage your expenses by season
Now that you have a budget and a payment plan, you plan to save also for seasonal expenses; like Christmas, back to school or holidays. This expense must also be included in your budget; In this way, saving a month with a fixed amount, you can cover the payment of these expenses without having to go into debt.
Step 7: Constantly review your budget
Making only your budget and payment plan is not enough; if you never check it out, you will never know if it is really working for you. If you feel that you finish the month too tight or that you do not have the capacity to save anyway; it is better to modify it, observe what expenses you can reduce or exclude for a few moments.
Your budget should not always be fixed, you should always adapt it to your needs; in this way you can acquire the skills of a good administrator. Remember not to be so hard on yourself at first, even if you can not save at the beginning; The idea is that you get used to working with a budget.
Without a doubt, the best way to improve finances at home is through a budget; where our goals and objectives are reflected, at the same time that we consider how to reduce our expenses in order to fulfill them.
It is not an easy task to adjust to a budget when for many years we have spent without control; but once you adapt to this new style of spending, you will appreciate having committed yourself at the moment you start to fulfill your goals.
Remember that in Juliet you have an option to which to resort in times of emergency; because we do not review the Credit Bureau or request a guarantee, through minimum requirements you can pawn your car to get money immediately.