Personal finance tips

Managing your personal finances is one of the most difficult tasks in our lives. The earlier you learn how to manage your finances, the better you will learn to make good financial decisions in the future. Although managing money in secondary school is not the best idea, university is an ideal place for young students to learn how to manage their finances, here are personal finance guidelines for students.

Estimate your own capital

The best way to work out your net worth is to assess your assets and add up your debts.

Add up the value of everything you own: cash, savings, retirement accounts, property and car values, valuables such as art and jewellery, etc. These are your assets. Then assess all your debts - whether it's a mortgage, car loan, consumer credit or credit card debt. Add them up and subtract them from the total value of your assets. This will be your equity - everything you own.

If your equity is positive, don't relax. To keep it that way, you need discipline, controlling your expenditure. If your equity is negative, don't panic; it's not a verdict, it's just a situation that can and should be changed. Obviously, you should work more, save more, spend less and pay your debts more actively.

Keep a budget

It's easy enough to create a budget. You just need to make a list of all your spending and income. This list will help you focus on your financial goals - whether it's to spend more wisely, pay off a loan or credit card debt, or save for emergencies or retirement.

On one sheet of paper, write out all your monthly income. On another sheet of paper, start writing down your expenses. This is more complicated because you will have to keep track of all your expenses, even the small ones.

Start with the main, the biggest expenses: car expenses, utilities, groceries, any debt payments you have to make. Your major expenses should be at the top of the list. Next, list non-essential expenses - things you enjoy, fitness and clothing, entertainment, going to restaurants and movies. Budgeting will allow you to identify more clearly where your money is going.

A simple tool like budgeting can do wonders for those who are used to spending uncontrollably. An elementary record of expenses often allows you to take a fresh look at your spending, to think about its necessity and the resulting value. A new perspective will help to eliminate unnecessary expenses without compromising the quality of life.

Ration your expenses in proportion to your income

To live within your means, you need to stick to a budget. If you cannot control your petty expenses, follow the so-called strategy of 'limiting obligatory expenses to 60% of your total income'.

Essential expenses include food, clothing, household expenses, insurance premiums, recurring bills (credit card, loan, car and housing payments) and all taxes. If your mandatory expenses amount to more than 60% of your income, you will have to cut back on some of them.

The other 40% of your income should be divided into four parts: 10% put aside for retirement savings, 10% for long-term savings (for a down payment on a house purchase, for example),10% for savings you may need for unexpected expenses and 10% for "interests and entertainment".

Revise your expenses

Re-evaluate expenses and increase savings will help you significantly reduce expenses and increase savings. Review all of your expenses. You'll probably find some that you could have done without. For instance, you might want to skip subscribing to cable TV (at least temporarily) or cut back on going out to restaurants and cafes. Perhaps you could swap your fitness club membership for a cheaper one. You could also renegotiate with other banks and take out a bank loan (if you have credit). Try to walk more and cut down on transport costs.

Reduce your wish list

If you're serious about starting to save money and increasing your savings, you'll have to sacrifice some of your wishes as well. Revisit the list of expenses associated with buying a new pair of shoes or a new coat. Maybe you should forget about your lifelong dream of buying a new car or taking another trip to the seaside. It's up to you, but remember that by saving today, you create a springboard for a better tomorrow. That is the opinion of experts.

Savings and even minimalist trends have become very popular lately: People on the internet are publicly living the "years without shopping", limiting consumption and trying to find the optimal balance between their own needs now and securing their future. There is no one-size-fits-all recommendation. Some people are fine with constant self-limitation, while others will be deeply unhappy with it. You can use any saving methods that don't annoy you.

Guard against impulse buying

Avoid impulse shopping. It's a sure-fire way to spend more than your budget - and usually on things you don't need.

Get on a money diet now

Make a lifestyle change now, without delay. Get on a "money diet" that will save you thousands of dollars over the course of a year, experts say.

Put your credit cards in a drawer and promise to spend only the money you have available. If you do intend to make a purchase with your credit card, make sure that you can pay it back during the grace period - otherwise the cost of the purchase will increase.

It's not obvious to many people that major expenses or purchases require long-term planning. Especially since there is always the option of taking out a loan. But after all, such an option leads to significant overpayments.

The most important piece of advice for those who want to start saving: just start doing it!

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