When I graduated and came home, I left my hometown for the big city. Again, as a city dweller from a small town I needed to save all I could in order to pay rent, transportation and all. By recording my daily expenses, I was able to know if I was spending too much on certain items that may not be necessary at that time. If you do this, you would be surprised at the amount of things you can cut out.
2. Pay Yourself First!
This concept is my favorite and is my personal wealth secret. This technique of managing your personal finances is simple. It means what it says – pay yourself first! This is what you do. When you first get your paycheck, do not do anything with it until you have taken some for the purpose of saving for yourself. What people typically do when they receive their paycheck is to pay off bills first.
In this case, you take out a portion you are comfortable with and put them away in another account. Inevitably, you will find that at the end of the month you will still be able to pay the bills with money saved for yourself. Try this, it is fun to see how you will naturally self-adjust your spending when you have saved some money aside.
3. Avoid Credit Cards
I should say avoid credit cards if you do not have very good self-discipline. I am proud to say that I have never got into credit card debts. Credit cards are wonderful things and with all wonderful things they can sometimes be prone to abuse.
If you have a tendency to delay your credit card payments and buy on impulse even when your finances cannot support it then avoid credit cards. Credit cards are there to provide a convenience. Not to sustain a lifestyle you cannot afford. Managing personal finances takes great discipline. Avoid credit cards if you have a problem controlling spending.
4. The Two Week Rule
You probably know this as delayed gratification. I used to spend a lot of time window-shopping as my office was within the shopping district. Inevitably, I ended up buying things that was not necessary. It could be a new shirt or a new gadget.
Money that could be saved, I spent. I was lucky to realize this fast enough – via my daily financial records – items that I was spending unnecessarily on. I created a two-week rule for myself. Each time I wanted to buy something on impulse I walked away. I tell myself that if in two-weeks I still want it bad enough I would then return to buy it. Often times, by two weeks I would have forgotten how much I wanted that item!
5. Shop with A List
Related to the above in managing your personal finances is shop with a list. This again requires self-discipline. When you shop with a list you avoid buying the unnecessary on impulse. These impulsive purchases have a tendency to eat into your savings or what you could have easily saved.
Managing your personal finances is easy. Yes, it requires a little self-discipline but it can be done. And its returns are well worth it!
