Money Management

You may have seen memes on social media about how salary is like water, here one moment and gone the next. You probably laughed at it because you could relate to it or know someone who can. We may find it funny because it’s true for many people but reality is that it’s not that funny when consider what’s at stake. There may be a business you want to put up or a dream house you want to build; they may not come true enough funds. Worse yet, there may be some emergencies that you’d need to spend for due to some unforeseen events. We know that we should save and invest money for the future but spending for the here and now is just so tempting. Strict methods of doing so we tend not to follow through after the first month. The key to following through is making the plan simple enough to understand and easy enough to follow. So here are three simple easy steps to help you get started.

The Piggy Banks. Have a few piggy banks at home to get you disciplined. The number of piggy banks may vary depending on the things that value but there are some which are must have like separate piggy banks for savings and investments. In the book Rich Dad Poor Dad, Robert Kiyosaki suggests that we should have three savings, investments and charity. T. Harv Eker expands on this in the Secrets of the Millionaire Mind by adding two more; one for education and another for play. Savings is to ensure that you have something to spend in case of any emergency or unexpected event, investments gives you an opportunity to earn from another source of income to help you grow your money, giving to charity just helps you become a better person, education fund reminds you to keep learning, and the play fund helps you enjoy the fruits of your labor. One of the reasons why many people fail to stick to their financial plan is because they think that you have to deprive yourself of luxuries; all too often, the same people will tell themselves that splurging every now and then is permissible which causes them to spend too much. The play fund helps with that since there is a certain amount set aside for you to enjoy.

Pay yourself first. You shouldn’t treat the piggy banks as second priority; it should be made before spending. The idea is that many people do not have enough funds to allocate once they have spent for expenses. With this in mind, you can prevent encountering the problem simply by doing things in reverse. Instead of saving after spending, save before you spend.