“I am indeed rich, since my income is superior to my expense, and my expense is equal to my wishes.” Edward Gibbon.
A new year comes with new hope and new dreams. We plan and start our journey hoping to improve different areas in our lives. New lifestyle choices are adopted and we promise ourselves to follow them. But do we?
One of the areas we promise to improve is usually personal finance. And why not? We could all breathe easy if instead of debts we had surplus cash safely stashed away. To achieve this, we promise to budget and save, you have probably even promised to start the 52 weeks challenge.
It is now well past mid-year and now is the perfect time to take stock. You might realize that you are not even halfway in achieving the goals set at the beginning of the year to improving our financial well-being. But you need not worry, All is not lost and there is still plenty of time to get things back on track.
- Evaluate Your Goals and Plans
First, you need to determine whether your goals were realistic to begin with. Were they just unachievable or have you simply been living beyond your means? Did you evaluate and explore on the possible current and future finances? Many people set budgets and savings plan targets and objectives without fully evaluating their current finances. If you have not met your financial objectives, then this is the exercise to go through, as it sets the record straight and lays down a foundation for all your financial planning.
2. Evaluate Income and Expenses
Gather every financial statement you can. This includes bank statements, investment accounts, recent utility bills and any information regarding your sources of income or expenses. Next, record all of your sources of income. This could be from employment, hustles or investments. Record the total take-home pay as a monthly amount.
Create a list of all your monthly expenses which would include utility bills, loan repayments, entertainment and the like. Some expenses must be paid every month but are essential and thus unavoidable. However, some of them vary, and it is important to try and ensure they do not get out of control.
Once you have computed the total monthly incomes and expenses, you can be able to evaluate whether the income exceeds the expenses so that there is a potential for saving. This means that you could look at what you are doing with the surplus income. If the money is not going into savings, long term or short term, then chances are you might be spending it on items that may not qualify as very important. If the income is less than the expenses, then you need to make urgent cutbacks to avoid getting into debt.
After examining your expenses, try and find some that you can quickly cut back on. Whether you are budgeting to stop yourself from getting into debt or to increase your savings, reducing spending is the best way to free up funds. Once you have established the areas you are overspending on you can take steps to curb that. If you cannot make any cutbacks, try and find new or extra sources of income, although this is easier said than done.
Conclusion: Sticking to a budget and making savings is the only way to put yourself on a firm financial footing. At this half-way point, re-evaluate your budgeting and try and find ways to make sure you will have something to smile about by the end of the year. A combination of long term and short term goals will make the task ahead easier since you will have laid out a plan of why you want to save, and how much.
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