#8 Simple Money Management Tips to Follow in Your Daily Life
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We are living in uncertain economic times, where everyone's career and income are at risk. There is a worldwide slowdown caused by Covid-19, now more than ever it's important to take control of your finances. Money management is a tricky business and lack of basic financial education at times puts you at a fix. To help you get started, we spoke to one of Germany's top financial experts, Phil Sokowicz, who shares that managing personal finance takes conscious steps to create a healthy financial future.
Knowing you have enough money for the present and future—is what makes you feel financially secure. Save, invest and money management need not be an uphill task. Here are eight tips by Phil that are easy to implement in our daily life that can improve your finances.
Don't Fudge It! Budget!
With the world facing rising interest rates and an avalanche of debt, people have to fall back on their savings just to survive. Day-to-day spending can become incredibly reckless and out of control if you're not monitoring your monthly incomings and outgoings.
To avoid such emergency measures, Phil insists that a sound and solid budget is by far the best way to keep the wolf from the door. "Begin by breaking what you spend down to the bare essentials, such as your mortgage, rent, utility bills, and groceries. If you have any money left over, it's always wise to invest a large percentage of it in a savings pot to account for life's unexpected emergencies. Living on a budget helps you adopt long-term thinking when it comes to your financial situation, and that's always a good practice to get into."
Invest For Success
Although having some spare money is good, it is recommended to invest and save if you want to reap the rewards. "If you can, have two separate savings accounts - one for everyday living and emergencies, and one for your long-term goals. If you pay into a pension, keep paying, but really anything that will add to your income in the long term is a sound investment," he says.
The Art Of The Deal
With all of us leading such busy lifestyles, we don't always have the time or motivation to shop around for the best deal on offer. "With most people, everything from their utility bills, to their mortgages, to their car insurance and TV packages could be made far more cost-effective. Shopping around and switching providers might seem like a thankless task, but I can assure you it's not," Phil explained.
Never Live On Credit!
We're all guilty of getting a little carried away on our credit cards at times, but too much credit can be a one-way road to disaster. If you can't afford to pay back what you're borrowing, you're creating a financial nightmare, explains Phil.
"You may want that house of your dreams, but please ensure you can afford the mortgage repayments. And that goes for credit in general. Always pay back what you owe on time, or your credit score will take a hit, and that'll lead to all sorts of problems."
Don't Overplay Your Hand
Rightly or wrongly, ours is the age of consumption. We can all feel the spell of feeling we need to spend our money on bigger, better, and brighter things. However, as a financial expert Phil stresses the common fact that spending beyond our means is a trap many fall into. Never commit to new bills or purchases that sound the alarms. Many are of the mindset that they'll buy now and worry about paying later. It is a mindset that leads to financial ruin.
Cut Loose A Little
There's no point working around the clock if you can't enjoy the fruits of your labor. Saving is all well and good, but everyone wants to live a little, regardless of age. "At the end of the day, money is for spending, so cut loose and enjoy it. But when it comes to fun, entertainment, and big purchases, only use the money left over after you've paid all your essential bills. Go wild by all means, but don't go crazy," he urges on spending with caution.
Think About The Future
When we're young, we all tend to feel we're immortal and live on a day-to-day basis. But when it comes to your finances and it's never too early to start building a nest-egg for the future.
"Retirement is something to look forward to, but it can be difficult if you're still paying off your mortgage, are in debt, or haven't got a good pension. If you have a workplace pension, it's often a good idea to consolidate it with a private one. Planning for the future is key when it comes to your financial well-being," he explains.
Practice Makes Perfect
Like anything worthwhile in life, it takes patience and effort to become a master that art of money. "Practice does make one perfect when it comes to money management. It's all about doing the little things right until they become habit-forming, and before you know it, you're a born naturally at handling your financial affairs like a pro," says Phil, who himself follows this mantra.
Money management is easier than you think. It's a habit that requires discipline and practice. As Warren Buffett said, "Do not save what is left after spending, but spend what is left after saving." If you can follow the aforesaid tips you can surely conquer the art of finance management and have a stable present-future.