Having sufficient money to fulfil all your dreams and desires makes you lead a comfortable life. This sufficiency varies from individual to individual.
If your current focus is not on maximizing your finances, the situation is under control. Having financial stability frees you up and lets you concentrate on other relevant things.
If you are financial stability, it can make your time more valuable.
Since financial stability is essential in life, here are some points to make you financially organized effectively.
The first and the foremost thing is to determine your income and expenses. List all the sources of your incomes and costs separately. Include all the sources in your list such as investments, salary, rents etc.
Expenses are known as your fixed outgoings such as bills, fees, rents etc. They cannot be avoided but can be prioritized as per the importance. Once you have deducted all your expenses from your income, you have a clear picture of the money left with you. This is your disposable income.
Once you have a clear understanding of your finances every month, you will manage your finances better. Then you can decide if you want to do more savings or investments or spend money on your entertainment.
Regular budgeting of your finances will make you more organized and aware of your financial condition.
- Include savings as expenses
Just as your other expenses, make your savings as one of the outgoings. Your monthly savings should be a part of your outgoings only as of the additional costs such as electricity bills, fees, rents etc. Future is unexpected, so it essential to ensure your savings are intact.
As a thumb rule, focus on having 6 months work of your income saving at one given point of time. If you are not the primary bread earner of your family and if something unexpected happens, you should be prepared to deal with it and not struggle with your daily living.
Keeping your finances intact, in case of an emergency, it will give you breathing space and will let you find another work opportunity. A fair amount of savings helps you lead a more proactive life.
- Timely payment of Bills
As per research, it is observed that many individuals pay their bills to post its due as they lose them.
Late payment of bills attracts a penalty fee. This penalty fee is an additional expense that can be avoided by being aware and alert. One way to avoid this penalty is the direct debit method.
You can set up direct debits that will reduce your stress and will also ensure timely payments. These direct debits also attract some discounts at times. Setting direct debits as your default payment method is not time-consuming and is easy to monitor.
Check your bank statements every month to ensure that the right amount is deducted from your account.
Pro Tip: It is advisable to set up 2 accounts if you are not good with budgeting. Once account will be for the incoming. The other will be for the outgoing acting as your spending fund. Keeping both the separate accounts can help you set up a monthly budget without hampering your other financial activities.
- Ignore bank charges
Avoid bank overdraft charges as much as possible. You should always spend as per your limit.
Working with an overdraft is a way of life for many people. Leading your life in an overdraft way can attract more debts and fees over the years.
It usually costs several hundreds of pounds over the years. Rather than going the overdraft way, you can spend within your limits and recoup a little until you reach 0.
- Good credit report
A good credit report plays a significant role in ensuring a fair amount of mortgages and debts. Having a favourable credit score attracts preferential rates too.
Maintaining your credit report is the right way of saving money. Having bad credit CCJ loans from direct lenders does not let you have easy mortgages.
Many direct lenders offer various loans and check your credit report for your credibility. These loans include personal loans, CCJ loans, vehicle loans etc.
Be prepared for everything in life. Having a substantial amount of savings will help you to be prepared for the worst in the long run.
Insuring yourself is also a good idea to secure your future. If you do not have to make a claim, it is good that if you need to do? Think of the worse and prepare yourself accordingly.
- Organized paperwork
It is a good habit to keep your paperwork intact. Irrespective of your employment status, either self-employed or subordinate, keeps all your receipts and bills organized in a folder. Keeping it handy will help you to refer to it in a lesser time when needed.
Keeping your paperwork intact is one thing and checking them off each month is another.
- Be a tech-savvy
Be environmentally friendly and go for a paperless approach. You can opt for an online banking option and be accessible 24/7. This will help you to clutter less paper at home.
Description: Read this blog to get efficient ways to be financially organized and implement them into your personal finance.