Managing your finances is a key life skill we all need to learn, so here are a few comprehensive steps you can take to master the art of taking care of your finances and even make yourself more prosperous by following them.

Budget

Budgeting may sound like it’s a term only people living in poverty use but that’s the furthest thing from the truth. Budgeting is the act of spending within your means. How you do it is simple. Learn how much you earn each month and keep a record of your daily transactions, what you buy and when. The most fundamental budgets within a month are food, rent and utility bills. To budget effectively you need to put a certain amount of cash aside for these things, enough to cover the basic costs. Anything beyond basic costs is living outside your means, meaning it is not essential.

Money Management

A good way to budget is to keep a money managing account either by an app or keeping a journal. Here you can find out just how much you spend on essential and non-essential purchases. If you find you are spending more than you’d like, find the area where the most money is going and learn to downgrade. There are some good apps out there that allow you to set a budget maximum each month and displays how much you save or go over that target. This keeps you informed of your expenditures and lets you know where you are going right and wrong with your budget plan.

Downgrade

Downgrading is the act of reducing expenditure to maintain a more reasonable financial lifestyle. If you find yourself not being able to meet your rent in part or full, consider moving somewhere where the rent is cheaper or cutting out non-essential purchases such as subscription services that you don’t use regularly or eating out. Little things such as these can make a big difference to financial stability and if they are causing deficits in your financial accounts, it’s time to give them up, especially if you’re struggling to make it one month to the other.

Save

One way to exert positive control over your finances is to save something from each month’s income and put it into a separate savings account at the end of the month. This creates a rainy day fund that you can fall back on during hard times. Don’t go into your essentials budget to do this. Instead, swap out a non-essential purchase to put the money into savings. You may not want to miss out but you’ll thank yourself later when and if you become unemployed for whatever reasons. It may even help you out in an emergency such as being stranded or ill.

These small steps are the key fundamentals of maintaining control over your finances. They may sound simple but they can take a little patience and time getting a handle on, so the sooner you start the sooner your finances will recover. After that, with disciplined management, your finances will recover and then grow.