Managing Your Finances Well
June 3, 2022
Are you one of those people who struggle with family expenses each month, max out their credit card limits, and barely make it out alive from paycheck to paycheck? Managing finances can be stressful. But, did you know that you can still be financially secure even without having a lot of money?
What you need in order to stay on top of your finances is everyday money management, also known as budgeting.
You’d be surprised by how simply organizing your finances can make a great impact on your future. It may sound easy, but it actually requires time, effort, and action—maybe even a little bit of math.
Living on a budget.
Having a monthly budget (and actually sticking to it) lets you see and understand where your money is going. It can help you avoid unnecessary purchases, prevent debt accumulation, and rack up savings for your future goals.
If you’re a beginner with big financial dreams, you can try the 50/30/20 Budget Rule. This plan was popularized by Senator Elizabeth Warren in her book All Your Worth: The Ultimate Lifetime Money Plan. The concept, at its very core, all boils down to dividing your income into 50% needs, 30% wants, and 20% savings. This makes it easier to prioritize your spending and pick apart how you distribute your wealth.
To begin the 50/30/20 method, you can follow these steps:
1. Identify your fixed monthly expenses. This is where 50% of your monthly income goes. This usually involves big and essential purchases like:
Housing - rental or mortgage fees
Food - meals and groceries
Bills - electricity, water and internet
Other essentials - health care, car insurance, maintenance medicines
2. Identify your wants. We’re being real here—we also want to splurge a bit on ourselves. According to the rule, you can spend 30% towards things that you want such as:
Clothing - new clothes or shoes
Hobbies - gym or yoga membership
Vacation - hotel stays or out of town trips
Dining - restaurants that you want to try
Entertainment - streaming subscriptions, movies, concerts/plays
3. Identify your financial goals. When your budget is already in place, it would be easier for you to allocate 20% of your income for your financial plans that will help you secure a worry-free future. This includes:
Emergency fund - In case of unexpected medical expenses, house or car repairs, and even taking a sabbatical from work, you won’t need to worry about borrowing money when you have a separate fund for emergencies. One trick is to make sure you have at least 3 to 6 months’ worth of your monthly salary in your account just in case you need it on a rainy day.
Debt payment - The lesser debt you have, the easier it is for you to achieve financial freedom and security. First, know which source of debt is causing you to stumble financially each month then pay it off bit by bit by allocating a certain amount for it from your monthly income—no ifs, no buts.
Insurance - Having protection coverage nowadays is a no-brainer. Everyone deserves to have peace of mind from financial stability and security. It’s also never too early to invest in an insurance policy. The sooner you buy a plan, the higher coverage you can get.
Paramount Direct offers both health and life insurance products for ages 18 up to 75 years old.
Our health insurance plans cover any illness or injury that requires hospital care as well as provide cash benefits, to be reimbursed after confinement, to assist in your recovery. On the other hand, our life insurance plans provide your beneficiaries with lump sum money in case of your demise. It is to assure your loved ones that life goes on despite you not being around.
Explore our website and learn more about our products at www.paramountdirect.com.
Don’t get behind your finances. Just be consistent in money planning and see how it can improve your family’s financial situation in the future.
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