Pay day, that time of the month when everyone is practically rich. You get paid and imediately embark on a spending spree; buying all items on offer and dining in expensive restaurants. A few days or weeks later, you decide to check your bank balances only to realize that three quarters of the salary is spent; and the worse part is, you cannot account for any of the cash spent. Well, here are some of the strategies to help you avoid such situations every other month.
Live below your means
Maintaining expenses at levels lower than your salary is a way of achieving financial security. However, living below your means does not mean leading a Spartan life; you can still enjoy life while living small. Just avoid meaningless experiences such as regularly eating outside, paying for unnecessary memberships or subscribing to boring cable channels. Getting rid of such expenses that are less important frees money for other essential things.
Always have an emergency fund
Assuming your car breaks down right now, do you have the money to have it fixed at that particular time? Having extra cash for emergencies is an essential part of financial planning. Financial experts recommend that an emergency fund should cover expenses for a minimum of three months. There are many banking options to consider; pick one that best suits you and begins saving at least 10% of your monthly salary. When choosing a savings plan, always avoid saving in stock markets because of the risks involved; instead, maintain the cash as a liquid investment for easy retrieving during an emergency.
Draft a budget
Just because you have a few bucks does not means that you can purchase every item on offer. Most people fail at managing their money because of the desire to own everything. Therefore, having a budget will help in planning on the amount to spend, and save. A budget is essential in tracking spending; hence, if you do not have it, this is the right time to create one.
Developing a saving habit early in life is vital in ensuring financial security during retirement. Starting an early saving plan guarantees high interest. Saving for retirement needs to begin as soon as one gets a job, thus, if you have not begun your journey to retirement, now is the time. It is never too late to begin; however, as soon the journey starts, concentrate on increasing the savings as much as possible.