We all know someone who is really good at managing his or her personal finances. You know, that person with the budgets and excel spreadsheets for everything. People who are good with personal finance management don’t necessarily earn more; they just work harder at controlling each cent they make. But you can too.
Here are well-know international financial experts’ tips to help you become better at managing your personal finances.
Tip 1: Start with the root of the problem
Suze Orman, the well-known financial advisor, author and motivational speaker says: “The only way you will ever permanently take control of your financial life is to dig deep and fix the root problem.”
Effective personal finance is not a hit-and-miss strategy. You can’t only get it right every other month; it has to become something you take seriously every month. In order to do this you have to get to that root problem that is standing in you way. Think hard and write down the top three things preventing you from taking control of your finances. Once you’ve done this, write down practical ways how you can curb each problem.
Tip 2: Live by a strict budget
Dave Ramsey, the radio host, motivational speaker and author of books like The Total Money Makeover and Financial Peace says: “You’ve got to tell your money what to do or it will leave.”
Such simple, yet incredibly powerful advice. If you don’t set up a monthly budget and apportion funds for various expenses as well as short-, medium- and long-term saving goals, you won’t be able to track your spending. If you have no control over spending, and no back-up savings, you run the risk of making debt.
Need help creating a budget, click here.
Tip 3: Change your money habits for the better
Another familiar motivational speaker and personal finance author is Tony Robbins. With books like Unlimited Power and Unleash the Power Within, Tony Robbins believes that “For changes to be of any true value, they’ve got to be lasting and consistent.”
We agree. Practice makes perfect. Be consistent with your budget and every change you implement.
Tip 4: Save! Save! Save!
The business tycoon and investor Warren Buffet doesn’t need any introduction, and his advice is just as solid as his bank account. He says: “Do not save what is left after spending, but spend what is left after saving.”
In the current South African consumer market this advice might seem a little over the top. However, seeing that 23% of South Africans have hardly any money left at the end of the month and 77% are broke, it is essential to get into the habit of saving something every month.
Click here for some advice on how to save more in 2016.
Tip 5: Prepare for emergencies
The award-winning author of over 23 books, Mary Hunt, is passionate about helping people cope with personal finance. She advises: “People don’t get into financial trouble because of the rent. They’re used to paying that each month,…It’s the expenses that are not predictable or regular that can be difficult.”
Does this statement ring true in you life? If so prepare for your emergencies by creating an emergency fund.
Tip 6: Save 10% of what you make
David Chilton is a well-known Canadian author and financial planner. His advice is that: “Wealth beyond your wildest dreams is possible if you follow the golden rule: Invest ten percent of all you make for long-term growth. If you follow that one simple guideline, someday you’ll be a very rich man.”
As with Tip 4, saving (or investing) 10% of what you earn is not always possible. However, this is an extremely valuable goal for you to work your way towards. This is also something parents can instill with their children from a young age to form this habit early on.
Tip 7: Get your priorities right!
As a professional motivational speaker and the author of popular and controversial books like The Idiot Factor: The 10 Ways We Sabotage Our Life, Money and Business, Larry Winget has gained a reputation for himself as someone who says it as it is.
His advice? “People don’t have money problems; they have priority problems. Get your priorities right and your money will get right.”
In today’s South African market this advice is partly true. Yes, we have some priority problems that are causing us to save less (and spend more) but with all our expenses going up, we are being squeezed for every cent. As a result we have to prioritise and plan even more effectively.
If you are unable to manage your personal finance because of debt, contact Debt Rescue. Debt counselling could assist you in managing your finances better. In our next blog post we will look at 7 more tips to help you manage your finances to a tee.