Tips for Managing your Personal Finances Manage your Finances Set up an Emergency Fund

Managing your personal finances is not an easy thing to do, especially when you have no previous experience, or if your previous experience was not a good one. In actuality, managing your personal finances is a never ending challenge, and you will have to constantly prove to yourself and to others that you are up to the task. While it may seem too difficult at first, over time you will come to realize that practice makes perfect.

Tips for managing your personal finances

Create a budget that you can live with

Depending on your steady income sources and your steady expenses, you can create a  budget that you can live with. Changes in your income sources or your expenses may occur, so get into the habit of evaluating your budget on a monthly basis, so as to make the necessary adjustments, if you have to.

Separate desires from needs

What we want, is not always what we need. While you may want that new black leather jacket, you can definitely do without it.  Needs should always come first. After you finish paying for things you really need, then and only then should you pay for something extra, that your heart desires. 

For example, after paying for your new fridge, you can spend a small amount of the money left to buy a new romantic novel. Do you really need it? No, you don’t, but you are allowed to buying a nice gift for yourself every now and then once you meet your obligations. Call it a reward for being able to prove once again that you are financially responsible.

Set up an emergency fund

An unexpected, high-priority expense can come up once in a while. Maybe your car broke down, or your DVD player needs to be fixed. What you can do in such cases so as not to hurt your budget, is  withdraw money from your emergency fund. Of course, in order to do that, you need to first  set up an emergency fund. Decide on a specific amount that you will save per week and stick to it. 

When possible, feel free to add a bit more. More can never hurt,  while less can. Keep in mind the purpose for which you save that specific amount and never be tempted to withdraw money from the emergency fund to make purchases. If you are not sure whether you can make it, play it safe and keep the money in a savings account, and not at home, where you will have easy access.

Keep the change

Get into the habit of keeping the change from every purchase you make in a money jar, on a daily basis. There are money jars that can even count your change for you, at any given moment! Over time, you will be surprised to see the accumulated amount. For better results, decide on a specific time frame where you will be allowed to use that money. Normally, it shouldn’t be less than 6 months, or exceed a year.

Do not shop for happiness

Another thing you need to remember when managing your personal finances, is not to shop to fill the voids in your life. Three new pairs of shoes that you do not really need, will not help you heal from your break up. Hit the stores only when you really need something, not as a way to compensate for something else. Your pocket will thank you, and you will not run the risk of having a stroke next time you see your credit card bill.

By following the above tips, you will manage your personal finances effectively, and as a result you will be able to enjoy a peaceful, debt-free life!