When spending or saving money there is always the same question of ‘am I doing the right thing?’. Unfortunately, there isn’t one plan that fits all when it comes to finances but there are ways to help you to build a plan that suits you. Especially in the current economy, it is important to know how much you are saving and spending so payments can be made while occasionally treating yourself.
1. Know Where Your Money Is Going
Being aware of where your money is going and your current spending is a good place to start. First thing to do is to take note of what payments are being made and it’s up to you how long you track this for; a week, a month or more. This will give you a basic understanding of what spending habits you have developed whether they’re good or bad and what changes need to take place. It’s also a good time to take into account any necessary payments that need to be met consistently, for example rent or bills.
2. Throughly Evaluate Your Financial Situation
This mainly is about becoming aware of your net worth and knowing this represents your previous financial decisions. The main goal is to earn more money than what you spend as this increases your net worth. There are plenty of free tools available to help you track your net worth by inputting your current investments, mortgage, bank accounts and more. If your net worth is increasing consistently it indicates that you’ve found the perfect balance.
3. Set A Saving Goal
Making a realistic saving goal and putting a certain percentage of your income in a savings account every pay day is an amazing habit to get into. Using this method sets you up for a high rate of success and decreases the chance of stress incase of a money emergency. Not to mention you can spend with peace of mind knowing that saving goals are being met.
4. Create A Financial Plan
Thinking in the long-term can be unnerving, especially when it involves money and the future. However, creating a plan with specific goals and thinking ahead with your money could mean being in a more comfortable financial position in 10 years time. Obviously, it’s easier said than done but being prepared is the best way to go.
5. Adapt Along The Way
Everything is life evolves and develops meaning we have to adapt, this applies to your plan as well. Updating and adapting your plan or goals is essential so they coincide with the change in your life. It could be when your pay has changed, property changes or the unexpected happens. The plan should adapt to you, not you adapt to it.
Good Luck finding your balance! If you’re not sure where to begin, seek professional advice by contacting us.
At Kara Accountants, we get to know your business and support you wherever you need it.