Everyone wants to and attain financial freedom but with so little emphasis put on how to look after your finances in school it can be really difficult to know where to start. There is so much to learn to be a complete master of your own finances but the first few steps are those that can make the biggest difference. Here is our guide to the basics of getting control over your finances.
Know where you are
This is the most basic step but so many people don’t even get here. You need to know all of your finances to understand and improve your finances. This is best done by means of a spreadsheet. You need to list all of your assets on one side of the spreadsheet. This is all of your savings, money in your bank account, all of your stocks and shares and any other assets you own. On the other side you need to list all of your liabilities. This includes loan debt, credit card debt and any other borrowings. This gives you the complete lowdown of where you are. It is from this point that you can make all of your other decisions.
Understand what each month does to your finances
After you have the big picture you need to know what happens to your finances on any given month. If your bank balance gets worse every month and your debt goes up then you need to make some immediate changes. If you have money left at the end of every month then you need to know the most efficient way to deal with this. By saving more of paying off debt you will change the face of your finances for the better every month. This is another spreadsheet as you list all of your outgoings on one side and all of your income on the other. From here you know how much you earn and how much you spend. It’s time for the last basic step.
Do something about it
Once you know what your situation it is time to see what you can do to make a change. There are only two factors that you can influence here and they are how much you earn and how much you spend. This is where you can make an impact. Is there overtime available at work? Can you cancel that magazine subscription? Is there a cheaper electricity supplier available? Work out where you can make a difference.