How to Manage Your Finances

Sunday, 8 January 2017

There is no denial that 2017 is running at full speed already. We are already just over a week into this new year but the responsibilities are already piling up. One of the top priorities on everyone's list should be the financial responsibility. When you're making an income yourself, the income tends to take on an opposite effect and flow out of your bank account as expenses. I've come to realise the importance of financial planning and how it drastically change the way you manage your finances. 

Everyone has a different way of managing there finances and there is definitely no wrong way of managing your own finances. However, there are ways to be smart about it and here are some financial planning measures which I have taken to help me better manage my finances.  

Financial Tracker
I've started using a financial tracker about two years ago and it has really helped me a lot to keep track of my income and expenses. I use two financial trackers - a daily financial tracker and a monthly tracker. I use the daily financial tracker to record each and every one of my purchases, whether it be a $1 bottle of water or $150 piece of jewellery. I colour-coded my expenses to a certain colour to match a specific category. At the end of each month, I consolidate all of my expenses into my monthly tracker (pictured above), where I record not only my expenses for the month but also my income and savings. I also make sure that I keep a folder with receipts of all my purchases, which I empty out at the end of the year, for two reasons - 1) to retain my warranty for certain purchases and 2) because it psychologically allows me to remember what I have been spending my money on. 

  • There's no good in having a financial tracker and never looking at it, so make sure you look at it and update it where necessary.
  • Record all your purchases! This will give you an accurate representation of what your current cash on hand is. 

Debit Card
A small plastic card that holds a lot of power. I used to use cash for a lot of my purchases but I have since moved on to using my debit card for all purchases where possible. It is very convenient and doesn't leave my purse heavy with coins. However, the best thing about it is that it leaves a footprint explaining why my bank balance is decreasing. I use the banking app almost every day to view my financial transaction details, which I then transfer to my financial tracker. 

  • When split bills are not allowed and one party has to pay the bill, make sure to transfer money to that person immediately to keep your bank balance live and reflective of what you have spent.
  • Check your banking app at least once a day to make you are only paying for what you should be paying for.
  • Do not open a credit card if you don't need it! There are costly monthly fees not to mention it has monthly repayments that you have to pay off! The good thing about a debit card is that you're spending your own money and there are very low monthly administration fees that can usually get waived if you're a student. 

Once you start working, your employer automatically deducts a portion of your gross payment and puts it to your nominated superannuation fund. But there is actually so much more to your superannuation then automatic monthly contributions.

It's compulsory for you to nominate a super fund or you can use the super fund your work recommends \when you start your very first job. Thereafter, on every paycheck you will see a super contribution. I actually didn't even have a online account to access my super until about two months ago. I was shocked to see what monthly fees I was paying for, which was eating into my super contribution and giving me a negative return. 

  • Check your super! Obvious but most people don't actually have any idea of how their super is performing! That's why there is so much of that lost super news going around. 
  • Shop around and find the best super for you! 
  • Know what you're paying fee. Superannuation isn't a free service - there are monthly administration fees to keep your account running and you actually pay for death and disablement insurance cover unless you opt out.

Budgeting sounds scary but it's actually not once you start. Know what you want, the cost of it and set a time frame on when you want it by. Then with every paycheck, put a portion of that towards your savings and if you stick by that plan, you should be able to purchase the item you want before you know it. 

  • Open up a savings account with your bank and transfer a portion of your pay there every month. As long as you don't make any withdrawals, you will accumulate interest.
  • Interest is calculated on a daily basis, so it's best to transfer money towards your savings account as soon as possible.

How do you manage your finances?

Jessica xx

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