Managing Personal Finances
In many ways, there has never been an easier time to manage your personal finances. Yet, it's clear that plenty of us fail to do so correctly. This is clear from debt levels in the UK right now.
Although there are absolutely loads of tools out there to help us monitor our financial situation, we may be failing simply because we're not sure what we should be doing. How exactly should we go about managing our finances?
Keeping things simple
When it comes to the world of finance it makes sense to try and keep things simple. While banks and financial institutions talk about trading, derivatives and foreign exchange markets, the rest of us would probably do better to think about our own situations. To a certain extent, we can ignore the wider picture.
When we look at personal (or family) finances we can basically think about them in terms of money that we receive (from earnings, tax credits, pension payments and other sources of income) and money that we spend (on everything from mortgage payments to school fees and cinema trips).
That's all that we need to think about: income and expenditure.
We can then take a look at how things are going and where we want to get to. In other words, we can examine our current income and expenditure levels. If we're not happy with them (because they're not helping us to meet our needs), then we can come up with a plan to change them. This plan might involve increasing income levels, by taking action, such as getting a new job.
Alternatively, we might look to reduce levels of expenditure. So we could, as an example, think about ordering a few less takeaways over the coming months.
As you can see, this is pretty simple stuff.
There's really no need to complicate things.
Recording your finances
One of the important aspects in all of this is to make sure that you keep a proper record of your finances. There are a couple of good reasons for doing so. The first is to keep track of where you're at right now, in financial terms. The second is so that you can carry out some useful planning and monitor your progress.
So how should you keep these records? Many people find that a simple spreadsheet (such as Microsoft Excel) is perfectly good for this task. Others swear by specialist personal finance software, while plenty more people are happy to use a good old-fashioned pen and paper.
The truth is that there's no right way of doing things when it comes to the format for keeping records. It's simply a case of finding a method that works for you.
You'll probably find that record-keeping will be easiest if you keep hold of things like receipts and payslips. Equally, it's worth pointing out that having online access to bank statements, credit card statements, utility bills and other pieces of financial documentation can be a great help in this area.
As was stated at the very outset of this article, it's undoubtedly the case that we've never previously had quite so many tools available to help us monitor our finances. We think this is a good thing - we're very much in favour of avoiding any complications.
If you keep your finances simple then you've got more chance of sticking to your plans. You won't see these tasks as so much of a chore. Instead, you'll realise that spending an hour or so on managing your finances could be enough to save you a considerable amount of money. That may help you towards the goal of buying a car, a house, or maybe a luxury holiday.
These are the things that personal finances are really about - the fun elements of life. Managing your finances properly is just a way of getting to those nice little extras.