Useful Tips I Used For Managing My Personal Finances

How do I mange my personal finances ? Well, for one, it most certainly wasn't smooth sailing. When I first started out in the adult world, I was all over the place with my finances. No structure, payments coming out of different accounts at different times, random unnecessary credit cards and just generally one big mess.

I didn't know any different and I was naive to say the least.

Then when I started working in a prop firm as a day trader, thats when things really got messy. I had money coming into different accounts with rent, electricity, etc being billed throughout the month.

Maybe I should have paid more attention when I was in school. Oh well..

When I started to earn some real money from trading is when it really became problematic. I'd pay with my credit card a lot because it was convenient at the time. The silent killer of anyones finances is the interest rates.

Just like compounding works wonders for us when we use it correctly, it works against us just as effectively with a credit card.

Anyhow, enough of that. Lets get onto some simple tips I used to literally just clean up my management of finances and make things a lot less stressful.

Hopefully you might find something useful for you too.

 

Payment Automation

 

managing finances

Well, obviously this was the first and probably the most important thing I did to almost instantly cut stress out.

I remember I could have literally a bundle of payments spread out over the month. So what did I do ? I set up a new bank account that I just used for bills, nothing else.

Also, when I was in the process of setting this up, I didn't realize some of the rubbish I was being billed for that I had forgotten about.

It's embarrassing to even say that I was this stupid but I'm sure some of you might find some surprises when you dig through your statements too.

Anyway, during this process of setting up a new bank account, I spoke to all the companies I was being billed by and tried to get them set up for a particular day.

This was tricky with some like insurance but all in all I got the bills down to being charged within a particular week each month.

Straight away I had a far better structure in place after this and found it so much more easy to keep track of things.

I could assess through a mobile app exactly how much I was spending every month and if there were any errors in statements.

 

Credit Card Reduction 

personal financial management

Right, my relationship with credit cards is one of love and hate. By that I mean, I love it and it hates me.

But seriously, I had too many credit cards and really didn't need them so I cut them all out bar one. I think at the worst I had 5 in total.

I certainly didn't need 5 credit cards. One was more than enough to get me out of a hole if I ever had a cash flow issue.

And to be honest, I should have listened to one of the richest men in the world Warren Buffett. He stated that we should avoid credit cards as best as possible.

 Ironic considering he owns part of Visa and other credit card issuers but still wise words for us all. 

Let me be super clear here. Credit cards aren't bad. Actually quite useful in emergency situations. It's the interest rate that comes with it thats the killer. That money can add up fast. I learned that the hard way when I was 18.

Spending recklessly on it and getting slapped with a nice juicy bill.

Interest rates can vary a lot. So be wise about it and don't make the mistakes I made with it.

 

Expenses Reduction

 

financial management

This can be tough as obviously you need to pay your bills for whatever services you require. But, when I did the above steps, I noticed I was spending money on nonsense I didn't need anymore.

Those small payments can add up to a lot over the course of a year.

If you go through your bank statements, a lot of you could find one thing to do without. However, this might not be something for everyone as you may already be tight and I understand that.

If you 'tidy up' your payment structure as I did, you may find that bills start to decrease due to a more efficient approach. e.g. interest rate payments are less because now most of your money is being billed from a debit account.

A very easy way to reduce overall expenses is paying for bills annually or semi annually.Obviously, this is not for everyone if you don't have the cash upfront.

But if you are fortunate enough too, you could save big by paying for example your insurance annually as opposed to monthly. This immediately reduces your annual expenses and  is something worth considering.

I saved 20% overall on my bills by doing this so it had a huge effect on my personal finances.

 

Create A Structured Calendar Alerts System

Since I got my direct debit payments to within one week, I set up an alert on my phone the Wednesday prior to this week to ensure I have the available cash to cover these expenses.

Any issues with payment, It gives me 4 days to sort it out before the bill money is required. Everything is automated so this isn't as big a hassle as it might seem.

I have everything fine tuned so it literally takes 5 minutes to have a quick glance at my billing bank account to ensure all is okay.

If there is something missing, I simply move money from one account to another. However, this is very rare as I've spent so much time on it that I know exactly what I need in the account.

 

Excel Is Your Friend

 

personal financial spreadsheet

 

Spreadsheets can be a very useful way to monitor your personal finances and find areas for improvement. When I started getting sense about my finances, I created a spreadsheet to start tracking everything.

One thing that immediately stood out when I did this was how much money I was spending on restaurants. I honestly believed it was a mistake and had to check it again but it was correct.

I was shocked...

Because of simply doing the excel spreadsheet, I was able to spot this and make changes. So simple but yet so effective and maybe you too might find something surprising in your spreadsheet.

 

Create A Budget

financial management through budgeting

 

Budgeting has never been easier than it is today. There are so many free tools to help in the budgeting process. The are some great mobile apps out there today to make this process simple.

This article lists the best apps both free and paid for budgeting.

No more confusion.  I love keeping things simple so the apps listed in the article are certainly worth a look.

Tracking your expenses is so much easier this days.

If you prefer creating a budget through a spreadsheet, this article has some useful tips on how to do so.

 

Paying Off Loans

 

debt repayment

 

When you bring together all the above steps, you may find it easier to pay off loans you owe.

When I had loans to pay, the steps mentioned above made it so much easier for me  and I got them paid off far quicker than I ever could have hoped for.

Here is 11 useful tips for getting out of debt and paying off your loans

Alternatively, 13 passive income ideas is a great post with some useful tips on how you can generate some extra income while you sleep.

I hope you found something useful here to help with your own personal financial management. I'm not a financial planning expert. I just simply outlined what helped me as it might be helpful for you too.

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