More than ever, it has become very crucial to be smart with money and be a better finance manager. This is necessary for both personal and business finance. It doesn’t matter your current financial situation, you can become savvier managing money in your day to day living. It all starts by learning to manage your budget. Keep reading.
Determine Your Financial Goals
First, you need to be clear about what you are targeting, so that you can create a budget appropriately. For instance, your financial goal could be to grow your business even in the midst of crisis.
Or, you may want to ensure there’s sufficient money for your family to live on even after the crisis before the economy takes shape again. It could also be that you want to pay off a debt. Spell out your most urgent financial needs so that you would know how to appropriate your funds to meet those needs.
Find Out What Your Exact Monthly Income Is
To create a smart budget, you need to first compute your monthly total income. The income is not just your monthly salary, but any other money that comes in through other avenues such as passive income. The idea is so that you would ensure you spend less than what comes in monthly.
It’s important to factor in unforeseen events and emergencies. However, your goal should aid you to avoid covering non-essential items with your credit card when you do not have sufficient bank balance.
Compute Essential Expenses
Next, you should compute your essential expenses. A better budget focuses more on essentials that you need to foot their bills monthly. You should prioritize meeting those essential needs. This is because they are not just important for your daily living but would hurt your credit image if you pay late or do not pay at all.
Typical examples of such expenses include rent, mortgage, utilities, credit card repayments, and car payments. Of course, your groceries, insurance and gas are also in this list of prioritized expenses.
You can use autopay to help you prioritize your bills. So, on the due date for the bill, your account will release the money. You must have sufficient balance in your account each month for the auto-pay to work. You also need to build your non-essential expenses into your budget. This will provide you with a total picture of what to anticipate in terms of your spending.
Finally and very important too; you should seek out areas you can cut back or completely eliminate expenses in order to save more. For instance, you should cook your own meals often instead of dining out most of the times – this can save you huge cost on the long run. One of the major areas that a business can save cost is staffing, by simply outsourcing more.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.