Ways to manage your money smartly

Ways to manage your money smartly

1-Read books on managing personal finances

If you need help managing your finances and don’t know where to start, check out financial wisdom books written by economists. Which covers many topics from how to get out of debt to how to build an investment portfolio.

2- Start preparing a budget

The budget is the best tool to change your financial future. Create a plan for how you will spend your money each month, based on how much you usually earn and spend.

Write down your income and all your expenses, then subtract the expenses from your income to determine your discretionary spending. Create a budget at the beginning of each month to allocate how discretionary funds will be spent. Determine if you’re sticking to a budget.

If you spend more than your income, you can adjust your budget by cutting down on unnecessary expenses or earning more if possible. Implement the revised budget the following month to live within your means.

3- Reduce your monthly bills

Reducing your monthly expenses and bills is one of the easiest ways to take control of your money. It is true that you cannot reduce your fixed bills such as rent or a car, but you can reduce variable expenses, such as clothing or entertainment and electricity bills, as well as buy your food at a reduced price from supermarkets.

4- Pay off your debts

– One of the biggest mistakes you can make against yourself is getting into debt, especially high-interest credit card debt.

– Start by listing all your current debts, whether it’s credit card debt or a car loan, and find out your minimum debt.

It won’t get you out of debt quickly, so take stock of your fixed expenses and decide how much extra money you can allocate to pay off debts.

5- Invest your money

– There are two basic ways to earn money: either earn it actively through work or earn it passively – that is, without effort – by saving or investing your money in stocks, mutual funds, real estate, or others.

– Always look at your investments for the long term and achieving a reasonable continuous return is better than a large quick return that will not last.

6- Find an additional source of income

Sometimes financial problems arise from insufficient income compared to spending patterns. If you are facing challenges in making ends meet, it is advised to look for a higher paying job or look for more than one source of income. Because that will give you a measure of financial independence.

7. Increase your retirement savings

You should ideally start saving when you start your first job. How much you should save depends on your age when starting out.

If you are in your 20s, you can save 10% to 15% of your income, while someone who starts saving in their 40s should contribute up to 35% of their wages for retirement.