Effective Ways to Improve Your Finances

First, you must record the current month’s planned income and expenses. A detailed spending plan cannot be kept in your head, even if you have a good memory. It will help create an overall financial picture.

How to do it? To begin with, we draw up a table with all receipts and expenses on paper (or in Excel, as it suits you). It is essential to think over the aspects of life well and not miss anything. Although the first time, of course, there will be shortcomings. It is impossible to carry out precise and correct planning right away. If you find any defects, you should record them in notes. This approach will help improve the budgeting scheme for the next month. Then each subsequent account will be better than the previous one.

Steps to help you manage your budget

You should plan any trip to the store. A shopping list and following it as closely as possible will help save money. It is helpful to make a menu for several days, based on which it will be clear how many products you need to purchase and in what quantity. To a large extent, the ability to plan your expenses well is influenced by the skill of time management. We have already discussed it in our article “Personal time management or how to manage your time.”

• Spending accounting. It helps to detect unnecessary purchases and avoid them in the future. You can write in a notebook notepad or use specialized applications on your smartphone.
• Putting aside money. There is always a risk of deprivation of a permanent income. There must be a reserve that will help stretch out for several months in an unforeseen situation. It should be at least three salaries.

Family budget: planning and controlling home finances

The well-being of a family depends to a large extent on budgeting skills. Written planning rules are also needed here. The ability to save is no less critical than accounting for income and expenses.

There is an exciting way to organize a household budget. It is called “10-20”. Its essence lies in the monthly saving of at least 10% of the total income. Financial experts advise you to set the goal of accumulation immediately—for example, a vacation, a significant purchase, or a reserve for a rainy day.

“Seven Envelopes” is another way to manage a family budget. On the day of receiving wages, you need to distribute the money in seven envelopes. Their purposes can be as follows (there may be fewer or more points, everything is individual here):

• Monthly Payments.
• Nutrition.
• Money for children.
• Expenses for essential purchases (furniture, appliances, clothing).
• Money for vacation, entertainment.
• Savings.
• “Joy” – funds left from the previous month after making mandatory purchases and payments.

By the names, it is straightforward how the family budget is distributed.

Method “Four Envelopes.” This alternative is like the last one. But here, each envelope corresponds to a week of the month. The disadvantage of this technique lies in the difficulty of allocating funds for specific expenses.

You must follow seven essential rules to maintain a household budget successfully:

• Avoid debt. Avoid debt, unplanned loans, and bad credit cards whenever possible.
• Moderate accumulation and distribution of funds.
• Choosing a specific goal (for example, buying a car) is advisable. Such motivation will improve productivity.
• Each family member must clearly understand how and why the budget is in place.
• Distribute income and expenses according to financial realities today.
• Be sure to set aside at least 10% of your income in the reserve fund.
• At the end of a certain period (for example, a year), please the family with a trip, purchase, or entertainment.

Regularly, preferably every month, plan and record. Only stability will help to achieve results.

Tools for efficient financial management

The way you manage your budget depends on your personal preferences and skills. It is more convenient for someone to keep a notebook or use a computer or smartphone.

If there is no possibility or desire to use technological equipment, you need a “granary book” in paper form. The central part should consist of a table divided into three columns (expense, income, total). Keep a record of the money that has come and gone in the first two. The last column is needed to compare the remaining funds with those in the pockets.

It will be much more efficient to manage finances in specialized programs. Many have a version for both PC and smartphones, allowing you to synchronize and enter data at any time of the day. The functionality of such software includes essential functions. For example, it automatically creates reports, allows you to track debts and loans conveniently, plans finances for the future, and stores savings data. Plus, many applications can add user profiles. That is, they help to maintain a joint budget with all family members.