Do you want to know more on how you manage your money wisely? Do you have a good paying job or a prospering business and doesn’t know how you spend your money well?
On the steps below you can maximize your income without worrying for your future and become wise with your money.
1.) Know your income: The first thing to consider for spending is your current status of finances. You should determine first your income to know if you are capable of the following breakdown of allocating your funds or money. This is to be able for you to apply the percentages below. Having a knowledge in spreadsheet or Excel will enable for you to manage well your personal income. If your income cannot consider the allocation for insurance and investment, much better to create a healthy financial status first before applying the principles I created on this article. But if you have a good income already, you can follow the breakdown below.
a.) Breakdown Your Income. Here is a simplified and suggested percentage of breaking down your income.
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WITH TITHE · Tithe – 10% · Insurance – 5% · Savings – 10% · Investments or paying debts – 25% · Expenses – 50% |
WITHOUT TITHE *
· Insurance – 5% · Savings – 10 % · Investments or paying debts – 25% · Expenses – 60% * Based on Vince Rapisura book: (L)earning Wealth: Successful Strategies in Money Management |
b.) Pay Yourself first – You should allocate also a percentage for yourself. It can be allocated to your savings and investments. It could be also be allocated to your dental checkup or going to a salon near you as part of taking care of yourself.
The formula should be “Income – Savings = Expense”. In the book of richest man in Babylon, you should save 10% of your income for yourself.
2.) Create a Budget. Budgeting is essential in managing your finance well. At the top of this article, we have allocated already your income. On this step you should determine the allocation of your budget into a more detailed way to breakdown into needs and wants. This will fall under all your Expenses.
a.) Focus on Your Needs First. You need to allocate your budget on your needs first. Your needs include food, water, shelter, health care, education if you are a parent and things you need to live. For others car is a necessity when you are having business that generates income. So, you need to include transportation expense when you buy a gasoline or crude oil. You can include also maintenance.
b.) Focus on Your Wants. Wants are just goods that you do not really need such as watching movies, travel expense for a holiday, junk foods, and the likes.
3.) Avoid Buying on Sale. I encourage people not to do the impulsive buying when on Sale. You can grab the offer when you really need it. But when you do not need the item do not buy on sale. This will give you added unnecessary expense that is out of your budget. Sale items normally attracts more buyer even if they do not really need it.
4.) Always pay in full and in Cash. Paying in Cash will make you a wise spender. It normally saves you from interest rates from the bank when you are using a credit card.
5.) For Big Amount of Purchase, Check the Price Online. With the advent of technology nowadays, consumers can easily check price online. This will make you a wise spender. It will help you decide the best offer and the best price for your wise spending.
6.) Apply for a loan when only need. Applying for a loan is good if you are using it for attaining more income. It will be ok also to get a loan for emergency purposes. But taking a loan for travel, for your appliances, and the likes is a big NO. You are helping the bank to grow their business but on your personal finances, it will just add up to your expenses.
7.) Do not buy based on your emotion. Emotion is good but using your emotion when buying is not. To be a wise spender you need to use your logical mind. You need to understand the why you should buy. It should give more value and favor to you or to your love ones.
You can always come back on this site to be updated in personal finance and other wisdom in life.
This is a short prayer for you, stated in 3 John 1:2, “Beloved, I pray that you prosper in all things and be in health; just as your soul prospers.
Hope this article will give a better perspective on your personal finance journey. If you have a question, please comment down below.
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