13 Tips To Simplify Your Money Matters
"The more money we come across, the more problems we see" - Notorious B.I.G couldn't have put it better. For me, my money seems to vanish into an infinite vacuum each month. If I'm not careful and cautious, no matter what I earn each month, it tends to quickly disappear into a never-ending abyss of wanting and needing, purchasing and debit orders. And when my cashflow runs out, I turn to the dreaded credit card which results in an endless, viscous circle of earning money to pay back money. Take control of your finances by following these 13 tips.
1. Save a portion of your income at the beginning of the month
Investment guru, Warren Buffet, advises that you shouldn't save what is left after spending but rather spend what is left after saving. Set an achievable savings target and transfer this amount into a savings account at the beginning of each month.
2. Cancel non-essential credit and debit cards
Don't be tempted into using credit that you can't afford to pay off by getting rid of additional credit cards. You will also save on bank charges each month by consolidating your accounts.
3. Consolidate your investment and retirement policies
Ensure that you are using the most effective platforms and products when it comes to investment and retirement policies. Knowing exactly what you are invested in enables you to be certain that there is no overlap in investment products so that you maximise your diversity and ensure your financial needs are being met.
4. Discover the hidden fees
Banks or financial institutions are notorious for not being completely transparent when it comes to fees and costs. Ensure that your not paying for various layers of unnecessary fees and that you are getting the most competitive fee packages. Understand exactly what you are paying for each month and on each transaction.
5. Only invest in financial products that are transparent and liquid
If you don't have a basic level of understanding of what you're invested in then you probably shouldn't be invested in it. Furthermore ensure that your investments are liquid so that you can access your money when needed.
6. Set up an emergency cash fund
Having a small stash of cash for urgent and unexpected transactions will safe guard against having to utilise those dreaded credit cards.
7. Get the best interest rates on credit and savings accounts
Shop around and compare financial products for the highest savings rates and most competitive credit rates.
8. Pay off your debt as soon as you can
Accumulating debt can become burdensome and stressful and whats more you can end up paying exorbitant interest costs. It serves to pay it off as soon as you can.
9. Your investments should be suited to your risk profile
Your risk profile should reflect your age, income and risk appetite to name a few things. Ensure that your investments are suited towards your needs and risk profile in order to maximise your money.
10. Analyse your income versus your outgoing expenses
Evaluate exactly what your spending habits are each month so that you can try decrease unnecessary expenses where possible.
11. Cut out spending on things you don't absolutely need
This could include spending less on take-outs, clothes or something as small as take-away coffee. Every little bit of saving adds up and can make a difference.
12. When buying a new home or car be honest about what you can afford right now not what you expect to earn in the future
It's easy to be swayed by attractive interest rates on mortgage loans or leasing terms on new cars. It's important to realise that a car is a depreciating asset that will be worth considerably less as soon as it has left the showroom floor and a home is the biggest investment we will make in our lifetime. Ensure your current salary can comfortably cover the monthly expenses when it comes to paying off both assets.
13. Set long-term financial goals
Keep yourself motivated to save and spend wisely by setting attainable financial goals for the long term.