We can’t all be accountants, but we do all have a responsibility to understand our own personal financial situation. Do you want to get control over your personal finances? Would you like to start saving money? Are you caught in the credit card cycle? Do you have financial goals that seem like they’ll never be realized? You’re not alone – many people struggle with personal finance challenges. It can be overwhelming and it can be confusing to attempt to learn about managing our personal finances, especially if nobody ever gave you a good example.
But the good news is that anyone can learn to be more financially responsible. If you want to understand your personal finances and improve your situation, you can.
Grasping the Idea of a Budget
Budget! A scary word that most people use to talk about something they hate! A budget shouldn’t be hard or scary. In fact, a budget is merely a tool that is used to determine just what the situation is. From a personal finance perspective, a budget can be extremely simple. Count up your expenses – anything that you spend money on – and then count up all your income. There you go, you just made a budget.
The next step will be to look at that income and figure out just where it goes each month. Most people don’t know where they spend their money because they don’t sit down to figure it out. Try collecting receipts for a month – every one. Try to put them in categories, like groceries, eating out, car expenses, entertainment, and whatever else you find you spend money on. It will start to become clear just where your money goes.
Once you know where the money goes, you can actively make the choice to continue as you’ve been going or change your habits. Eating at home is much cheaper than eating out, in general. This is one way you can probably save a lot of money if you eat meals out on a regular basis.
Don’t Be Afraid
Another challenge that many people face when thinking about their personal finances is the fear of knowing. It’s normal to be afraid that if you see the actual numbers, you’ll be ashamed or embarrassed. Don’t worry. It’s actually really liberating to understand your personal finances. You’ll be proud of yourself for figuring out what your monthly budget is and you’ll feel in control once you actually know how you spend money.