Prices for goods and services go up every year because of inflation and our government rarely hesitates to pull the trigger on a tax hike. Add gas, groceries, rent, Internet, cable, cell phone and all your other bills and it seems that almost nothing is left after all these expenses have been taken care of. This is why you need to take care of your money in order to be able to pay your bills on time and be ok in case an unfortunate turn of event makes you lose your job. In this article, we will tell you 3 actions that you need to take in order to manage your money well.
Set Up a Budget
You might say that you know how to do a budget or that it is not necessary because you never have any money left anyway after all your regular bills have been paid. However, you may be surprised to discover that you do have some money available after you take the time to set up a well structured budget that will take into account all your revenues and expenses. Indeed, you can decide to follow a weekly, bi-weekly or monthly budget to track the money that comes in and out of your pocket. In our opinion, a budget cycle that follows your pay periods (usually weekly or bi-weekly) makes it easier to manage your budget, especially if you use a smartphone app.
Do Not Always Go For The Highest Priced Goods That You Can Afford in Theory
One financial advice that almost everyone has heard at least once during their life is “Do not live over what you can afford”. While it is a very good advice that you should absolutely follow, we think the most important advice you should follow is the following : ‘’Do not spend the maximum amount you can afford in theory.’’ What we mean is if your bank can give you a 400 000$ loan for a house, do not borrow 400 000$. Instead, look for cheaper houses in order to give you a little bit of a financial cushion. Why should you borrow lower than 400 000$ if the bank has authorized the loan? Well, the bank looks at your financial situations now and does not take into account any unexpected life events such as the birth of a child or the loss of your job. When taking a loan, you need to ask yourself how you will be able to pay your payments if an unexpected event happens. If your answer is that you are in deep trouble, try to take lower loans and settle for less luxury. By giving yourself financial breathing room, you will be able to set a rainy day fund, save money for your retirement, etc.
Schedule an Appointment With a Financial Advisor or an Accountant
Financial advisors and accountants are excellent resources to help you plan your current and future financial situation and you should absolutely take advantage of their knowledge. Indeed, financial advisors will help you to choose the best opportunities to optimize your finances and to set aside money for your retirement while Chartered Professional Accountants are able to provide a wide range of accounting services such as tax planning and estate planning.
This concludes our article on the 3 actions you need to take to optimize your money management. We hope that reading this article will help you to take control of your financial situation and that it will improve your quality of life as a result.