Monitoring your finances is very important. It is one of the keys in successfully implementing a financial plan and achieving financial goals. Many people never pay much attention to their finances until they come to a point where they fall short of cash. The smallest expenses in a day could sum up to a very significant amount if you keep track of your finances to the last detail. Knowing your daily disposable income will let you know how much are you going to spend in a day without running out of cash of struggle to comply your financial obligations. In the long run, you can also compute and plan your weekly, monthly, and even yearly expenses. Here are some ways to compute for your daily disposable income:
1.) Track down your earnings. Take note of your net income whether it’s on a weekly, bi-monthly, or monthly basis. Knowing how much are you receiving in a specific period of time is very important because that is where you are going to start in determining your daily budget and drafting a plan. If you earn on an inconsistent basis, such as being a freelancer or business owner, you need a tighter plan, and maybe it is a much better idea for you to earn more as often as possible to continuously increase incoming cash flow.
2.) Prioritize recurring bills and other financial obligations. Bills normally come in every month and must be settled as early as possible in order to avoid penalties. Water, electricity, and credit card bills are among the most common, while the school fees of the children, health care and insurance premiums, and other investments are among the most common financial obligations. Settling these responsibilities as early as possible could give you peace of mind. Take note that these are needs so you could prioritize properly.
3.) Save a portion of what’s left. Financial planners and experts suggest that you should save at least 10% of your incoming cash flow. For some, it is doable but for some who are receiving smaller amounts, 10% might be too much. If you can’t afford to save 10% of your net income because of the bills, save at least 10% of the amount that is left after complying your financial obligations. That wouldn’t be much of a burden because after all the payments has been made, what’s left are your wants.
4.) Budget what is left on a daily basis. Now that you’ve already paid your bills and other responsibilities and also saved, it’s time for you to compute for your daily disposable income. Daily disposable income must be an amount that you should spend without jeopardizing your financial plan. Depending on the frequency of incoming cash flow, simply divide the amount that is left by the number of days within the interval. The quotient is the extra amount that you can save everyday.
Many people fail to realize the importance of budgeting and getting into the details of their finances. Avoid doing such mistake by being so keen and detailed on your finances. A $10 snack everyday costs approximately $300 in a month and $3600 in a year. You may have never realized it because $10 isn’t that significant of an amount but if you get to see the whole picture, it sums up to an amount that could make a difference in your life. If you’re a little more strict and disciplined in your finances, you can be $3600 richer from just snacks.
Dealing with finances becomes complicated if there are some areas where you haven’t considered and planned out. Plan everything and see where does your money go everyday. You’ll realize that there are things that you can and really have to omit which could make you save a lot of cash.