Money: 4 Tips To Spare The Dime and Be Smart

Do you always feel broke even after receiving your paycheck? If yes, then you may be having a dysfunctional relationship with money.

In Africa, few people are born into wealth. Generally, basic finance skills are not taught in school and at home. As a result, adults devote their earnings to survival, leaving little for investment. Others end up living from paycheck to paycheck. Fortunately, there are several online courses you can enrol to learn about money matters.

If you lost your primary source of income today, can you sustain the lifestyle you’re accustomed to now? If no, then you are broke. And since you don’t have an infinite time to work, it’s essential to understand the concept of money and how you can be smart with it.

How can you be smart with your money?

1. Live Within Your Means

Society commonly judges financial success according to your spending patterns. However, wealth is determined by how much you save and convert into assets that generate passive income. Don’t incur high expenses that consistently exceed your income. For example, if you just started earning and are renting an apartment, your rent shouldn’t be more than 20% of your net salary.

2. Track Your Money

Most people don’t know where their money goes or how much their lifestyle costs. Being conscious of how and what you spend on can help you save more money. Review your monthly income and expenditure. For example, ask yourself what your guilty pleasures are. Are they needs or wants? Can you live comfortably without them? Then, cut off wants that can make a significant impact in terms of saving.

3. Deal With Your Debts

First of all, if you must borrow, borrow money to acquire assets that appreciate. Don’t borrow to furnish your house. Debt can be crippling. Confront the biggest and the most threatening, take control of the situation, and come up with a plan. One of the ways to deal with your debts is to consolidate. Debt consolidation means taking out a new loan to pay off multiple debts. This way, you can benefit from getting low-interest rates and low monthly repayments for one credit.

4. Open an Emergency Fund Account

After you’ve dealt with these issues, don’t wait for financial surprises. Start by saving towards your emergency fund. The fund acts as a cushion against unexpected expenses. For example, job loss, hospital bills, sudden death, and natural calamity such as floods. Always look for saving accounts that accrue high interest and are easily accessible.

Final Thoughts

It’s not about how much you earn. Instead, the problem is the poor management of your money. Be the master of success. Control your spending impulses. Know your net worth by taking all your assets minus the liabilities. Your assets can be liquid cash, stocks, and properties. Liabilities can be loans and mortgages. It doesn’t matter whether your net worth is minimal. You can always keep it growing.