Tax Accounting

The Ultimate Guide to Getting Your Finances in Order

Understanding how to handle your finances is key to keeping you out of debt while achieving your financial goals. No doubt, managing your finances is not an easy task.  Yet, if you do not handle it well, it can lead to serious financial problems and ultimately bankruptcy.

How can we define personal finance?  Personal finance is the management of your money, such as income obtained, budgeting, saving, planning, investing, borrowing, lending, and insurance.  To manage your finances, establish good records to track your finances.

Budget your Finances

Preparing and sticking to your financial plan or budget is vital to managing your income, expenditure, savings, and investments.  Your finance budget is critical to achieving your financial goals.  So, which ultimate guidelines serve as an aid to put your finances in order?  Consider these guidelines.

  Examine Your Current Financial Situation

Before you can move forward in managing your finances, you need to know how much money you have in terms of cash flow, income, savings, investments, and more.  How?  Sit down and record all your monthly income and expenses.  Start by getting an idea of how much you spend every month.  Save all your receipts for a month, from grocery receipts, fuel receipts, bill payments, cash, and expenses on your credit card, credit card charges, and other expenditures.   For sure, it is a tedious task, but it will help you understand your expenses.  At the end of the month, deduct your actual expenses from your monthly generated income, and figure out how much you have as extra funds.  The surplus funds translate to your current financial situation.

  Set Your Financial Goals

Having a picture of where you want to be financially in the future will help you set your goals.  Start by noting down your lifestyle habits, values, and goals.  Having specific financial aims will make you establish practices that will help you achieve the specified goals.  Financial goals might be to buy a house, save for your children’s future education, save for your retirement, and so on.  These goals become your obligations.

  Reduce Monthly Debt Obligations

Beware of companies that offer you a quick fix to eliminate your debts. Search out credible financial institutions that give loans at competitive interest rates.  Look at the minimum down payment requirements and check them against your financial budget.  At the very least, pay off your monthly minimum payments on your loan balances.

  Save for Emergencies

The fundamental reason why we work is to manage our basic needs and improve our lifestyle. Setting aside some amount of money for unexpected expenses is crucial for the health of your finances.  If an unexpected expense keeps recurring, you might have to plug it into your budget as it no longer is unexpected.

  Track the Progress of Your Finances

It is advisable to remember that your monthly spending or expenses keep changing. Unexpected circumstances might call for you to spend more than what you had initially budgeted for the month. Therefore, keeping a track record of your finances will assist you in identifying spending areas that could be trimmed or tightened.

Need financial advice on how to manage your finances. Set up an appointment with Tostrud & Temp to achieve your financial freedom.