Management of your personal finances can be challenging.  However, it is a necessary skill for those whose goal is to live debt-free and acquire wealth. There are specific and necessary steps to follow if financial independence is your goal.

Get Organized

If you are disorganized in your everyday life, you are apt to have difficulty following a budget. Purchase a software program to assist you in keeping track of all your accounts and payments. Save all of your cash receipts, chequing account statements, and credit card payments. Receipts should include every purchase and payment, including housing, insurance, car, gas, groceries, pharmacy, clothing, restaurants, movies, repairs, home purchases, services, and your weekend fun money. A three-month examination of all your receipts will tell you what you spend on rent or mortgage, insurance, life necessities, and entertainment.

Don’t Spend More Than You Earn

The first principle in financial responsibility is to spend less than you earn. Using your financial software, you are able to discover how you spend your money. Calculate how much money you spend on entertainment and eating out. These are the first areas where you should cut back. If you buy lunch on workdays, decide to pack meals and eat in your office at least three days a week. Put every dollar you save into a separate bank account. If you can save $100.00 or more a month, it won’t take long before you can start growing your money.

Eliminate Debt

Before you can save money and put it to work for you, all debt must be eliminated. This may require some sacrifices. Keep your car as long as possible. Don’t add debt just because you want something newer and better. Don’t fall into the trap of updating your smartphone every time a new model is available.  Resist the urge to purchases devices you don’t really need. That money can be applied to decrease your current debt balance.

Read Financial Magazines and Books

There is plenty of good financial information available in books, magazines, and online investment websites. Choose well-regarded and reliable sources. Read to understand investing and how it can grow your money. There are both good and bad investment tactics, and knowledge is the key to making the right choices. Take advantage of employee benefits, such as RRSP plans, company stock, and insurance programs that can help you earn and save money. Be sure to utilize any benefits that can reduce out-of-pocket expenses. Take an investment class at your local community college and learn how to earn.

Diversify Income Sources

Everyone has talents and skills that can be turned into additional income. Teach a class for your local adult education program showcasing your skill or talent. Can you teach seniors how to be more in tune with technology and its benefits? Are you an artist or writer? Is knitting or crocheting a skill you can teach others? These skills and dozens of others can help you earn money. Check with your local high school or public library, and ask if you can be part of their ongoing adult education classes. Students pay a set price per class. If you were a good student in a particular subject, you can pick up some tutoring jobs with high school or college students. Notify local schools that you are available. Place all the money you earn from extra income into your savings account.

Plan for Emergencies

You never know when an emergency will occur. Insurance for your car, residence, and health will cover the cost of many unexpected expenses, but you also should have an emergency fund for things that are not included in your policy. An appliance may need repair or replacement, or you may need to take an unexpected emergency trip. Natural disasters may also be the cause of some damages not covered by insurance.

Start your plan for the future today. Saving money when times are good will help you in the event an emergency arises, and it will prevent your financial goals from being derailed.

 

 

 

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