Finance

How to effectively manage your earnings in a harsh economy

There is no doubt that the current unfavourable economic situation coupled with the high inflationary trend has continued to have an adverse effect on the standard of living of the populace regardless of the social financial status. 

With this, survival has become a colossal challenge especially to the common folks. The persistent rise in the prices of commodities has also not helped but worsened the unpleasant situation. 

The depreciating value of Naira has made the earnings of individual worthless such that living within one’s income is almost impossible owing to inflation. 

Besides, the situation does not allow savings but encourages debts to keep afloat, which is not a good way of life. 

Do you know that building up so many debts will cause you to be in perpetual financial bondage, always scared of what the future holds for you and your family? Savings in these dire hard times can be very taxing as the extra money to set aside is not just there because it has been consumed by inflation. 

But then, it is expedient to plan for the future especially if you have a source of livelihood to avoid financial blame game. 

That is why it is crucial to give priority to savings and investment if you really desire to reach your future financial set goals. And one way to attain such is to up your earnings especially if it is ‘nothing to write home about.’ 

And without good financial sense or judgment, it is quite thorny to have a grip of your money or reach financial independence but with the appropriate financial mindset, prudence and discipline, you can effectively manage your money in this unfavorable economy. 

The under listed tips if adhered to will assist you to use your money judiciously: 

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Weigh Up Your Income 

It is very crucial to appraise your income to avoid pointless operating cost and bloated budget. If your monthly earning is on the low side, you should try as much as possible to live within your budget to meet your pressing needs. 

But, when you are pre-emptive and have a plan for your money, you can at least avoid getting into debts and making your situation worse. But, with a good financial plan in place, you can ardently manage your money without regrets. 

Spend Prudently 

It will do you a great good to think before you spend, particularly when you are faced with a spending decision that has to do with large purchases. 

Do not just accept you can afford something when you have not actually confirmed if the required funds of the purchases have not been tampered with. That is why budgeting is vital and cannot be ignored if you desire to manage your money better this year. If you do not keep track of your expenses whether bulk or small, savings cannot be accommodated, rather, you will give room for debts accumulation. 

Have Spending Plan 

Many people do not see the need of having a budget as they regard the process rigorous especially in the area of listing out expenses. 

Instead of focusing on the process of creating a budget, consider the value that budgeting would bring to your life. Having a monthly, yearly or weekly spending plan is a panacea for unnecessary expenses. If you are the type that cannot shun impulse buying, then you really need a budget to keep you on track on your spending habits. Spending your money on paper before you distribute it in the real world enables you to have complete control over your money. 

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Be Practical About Your Budget 

You need to be honest with yourself about your budget. After all, it is your money and how you spend it depends on you. 

So, there is really no need to be untrue to yourself in the area of expenses when making a budget. Just try as much as possible to make a budget that is pragmatic for easy adherence. 

But, if you have no clue on how you spend your money, your budget might take a few months to constrict. That is why it is important not to put down any inflexible numbers until you can get realistic with yourself. 

Always Review Your Budget 

It is important that you try as much as possible to review your budget and your expenses at least monthly as life itself is erratic. 

You might get an increase in your salary and that means you can save more if you are prudent. 

Have Grasp Of Your Money 

As soon as you start using a budget to get complete control of where your money goes, then you can start confronting your debt, by trying to make effort to clear them and living within your income or spending plan. Your aim should be to banish getting into debts. 

Adhere To Your Budget 

Your budget is worthless if you make it and refuse to use or adhere to it or worse still, allowing it to gather dust in a folder stuck away in your bookshelf. 

It is important you talk about it frequently throughout the month as it would help to guide your spending decisions. 

Ensure you update your budget as you pay bills and spend on other monthly expenses to have an idea of amount spent on expenses and what you have left. 

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Restrict Your Expenses 

It is crucial you try as much as possible to limit your expenses or spending habits especially purchases not budgeted for if you want to manage your money better. 

A critical part of your budget is the amount of money left after you subtract your expenses from your income. 

A prudent person may desire to save such if it is of great value but if not and you desire to spend it. Your purchase must not be more than the money saved. 

Track Your Expenses 

It is imperative you track your expenses, as small procurements here and there add up speedily without your knowing and if care is not taken, you may end up overshooting your budget. That is why there is need to start tracking your spending to determine places where you may be unintentionally overspending. 

Keep your receipts and write your purchases on a spending paper, classifying them so as detect areas where you have a hard time keeping your spending in check. 

Plan For Unexpected 

You need to plan for the unexpected by having a fund dedicated for that purpose so as not to be taken unaware when it occurs. For example, you apparently do not plan on your car breaking down, or your child needing medical attention, but it pays to anticipate this unforeseen event to happen and make proper financial planning. 

Create Investment Plan 

As your savings start to grow, ensure you have an investment plan; you could put more money into your pension account. By so doing you are planning a comfortable retirement life for yourself and family. Create an investment plan based on your goals and time frame. 

Independent

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