Facebook Twitter Linked In Linked In

6 simple steps to manage your finances

Posted by on in Envision
  • Font size: Larger Smaller
  • Hits: 1834
  • Print

 

 

 

Quote of the Month

 

Vision Retreat Workshop

 


My last 3 months have gone into heavy traveling in the Middle East and gave me another opportunity of meeting number of people from different backgrounds. I had quite a few meetings related to advising and coaching individuals and families and one thing that I have noticed is that majority of the people are worried because of an uncertain financial future. Some of them have lost their jobs, some are on the edge of losing their jobs, companies are shrinking their workforce and operations, and many people are looking for advice on how to manage such a situation.

Since I started my professional career and especially in last 10 years, the most common thing I have observed is our obsession with “busyness”. While many of us know modern world is addicted to busyness, and there are random conversations about it, we’ve grown accustomed to our “busy” ways and not much has changed. We are still so inclined to be busy, busy, and busy that we almost feel guilty when we’re not busy.

The world’s struggling economy, oil & housing crisis, continuous wars in the Middle East and credit crunch have undeniably impacted millions of people. The complex nature of turbulent capitalistic economy leaves many people feeling confused and powerless.

While it’s important for us to understand the system and how it works, it is even more important for us to empower ourselves to take good care of our personal economies – our monthly income, expenses, and investments. The discussion on the system, how it works and if there is some alternatives shall be done in some other sitting. In this small essay, I am just going to share some of my thoughts on managing personal economies.

“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” - Goethe

The most important thing to remember is that the only thing that you can control is your budget and expenses. The task is not always easy, but the basic fundamentals of smart money management still apply no matter how confusing things get on at macro level. I hope and pray that you are not the one who is affected by the financial crisis, however, the circumstances keep changing and life is all about bright sunny days and sometimes dark gloomy nights.

Changing your spending habits are the first and maybe the most difficult undertaking your family will face while trying to survive the financial crisis. Living as though nothing has changed is the number one mistake people make during challenging times and can lead to seemingly insuperable debt.

Keeping yourself financially stable is a continuous struggle. Taking steps to safeguard your family’s financial requirements will be critical in ensuring your ability to withstand the financial storm.

Following are the six simple steps that you can think of applying to manage yourself better financially.

1. Redefine your spending


Many people underestimate the bad money habits that can eventually take over their finances. We often don't wise up to our habits until they've become hard to manage. If your income has dropped, your spending must also. Old habits are hard to break, but your family may need to forgo some traditions like eating out on weekends, or Sunday outings to expensive places or meaningless parties with friends, until your financial situation changes.

Chains of habit are too light to be felt until they are too heavy to be broken. – Warren Buffet

2. Little changes count.


Even small changes will have an impact, and more importantly, will set the stage for changing your habits. Your family will be stronger financially in the long run, and once you get on the right track, you can begin saving for something big (like a vacation, or new car, or a better home etc.).

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” -Will Smith

3. Be a smart shopper


Always shop with a list and take cash so that you can’t overspend. Do not give liberty of spending (especially credit card) to your family. Purchase only absolutely necessary stuff. Once I advised a coaching client on how to keep an eye on your expenses, he reported back after few months that he and his wife together are able to save USD 150+ every month from not important stuff and this greatly helped them in those financially tough months.

“If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step towards getting financially stable.” -Mark Cuban

Warren Buffet said something beautiful...

If you buy things you do not need, soon you will have to sell things you need. – Warren Buffet

4. Pay your bills on time


Late fees and over-the-limit charges can seriously add up to the debt burden. In addition to that, creditors push debtors to pay more to secure their amounts and even put more penalties for late payments. I recommend keeping the use of credit cards to minimum and never ever using the facility of “minimum payment”. Always settle the credit card bills in full by the due date to avoid always increasing interest. We must remember that the interest is one of the filthiest diseases of 21st century, destroying scores and scores of families globally. Remember…

Some debts are fun when you are acquiring them, but none are fun when you set about retiring them. – Ogden Nash

5. Deal with big issues


If you have large, looming financial issues, such as unpaid loan or tax liability, it is time to deal with them carefully. Contact your creditors and make acceptable repayment arrangements. Implementing a plan to remove these stresses from your life will be good for your mental and financial health.

6. Maintain 3 accounts for your money


Most of us have our money in just one pocket – one bank account. This account has our savings, expenses, our charity…it’s got everything. What you should really do is to have 3 accounts if you want to avoid a sudden financial crisis.

The security account. This should be a separate bank account, with a separate access, ideally in a separate bank from your regular spending account. In this account, you should have 3 months living expenses. Calculate what that is, fill this account till you get to that level and forget about the account.

This account gives you security in case your income stops for whatever reason. Just knowing it’s there will make you feel more secure and confident.

Don't save what is left after spending; spend what is left after saving. – Warren Buffet

The investments account. Every month, you should put a certain amount towards investments. Choose a set percentage or an amount and deduct it from your monthly income immediately after your income is credited to your main account. Invest this amount in some halal investments, which are easily available these days. Now, once you have your security account set up and your investment account going on, whatever is left will go in your regular expenses account.

The regular expenses account. Your regular living expenses, charity, dinners, treats, vacations – You can spend whatever you want from this account without any worry because you’ve got your security account and investment account taken care of.

The way to wealth is simple. Spend less than you earn and invest the difference wisely. – Rob Berger

Finally, you should not forget to think about your life comprehensively with a long term perspective. One of the major reasons why most people, organizations, communities and nations suffer is not working on long term visions and not coming up with a proper strategy to safeguard their respective futures. Just like we have talked about managing our finances, we also have to plan to avoid crisis in other aspects of life, which also requires knowledge, wisdom and ability.

I hope this will help you and I look forward to your comments as always.


 


Yameenuddin Ahmed has been associated with Timelenders since 2004 as one of its key leaders in the area of life transforming trainings, coaching, and counseling. To date, Ahmed has helped thousands of individuals and hundreds of organizations in developing worthy and powerful visions and in bringing order, enhancing character, and improving performance in personal and professional living. (Read more)


 

 


 

Strategic Time Management

Marriott Hotel, Karachi

05 – 07 February, 2016

 

Effective Leadership Through Character

CIME – Agha Khan University, Karachi

06 – 07 February, 2016

 

Bridging Difference

Faletti’s Hotel, Lahore

12 – 13 February, 2016

 

Sleep Management

Faletti’s Hotel, Lahore

14 February, 2016

 

Where Do You Want to Go

Faletti’s Hotel, Lahore

14 February, 2016

 

Strategic Visions

CIME – Agha Khan University, Karachi

19 – 21 February, 2016

 

Strategic Visions

Faletti’s Hotel, Lahore

26 – 28 February, 2016

 



 

Strategic Time Management

CIME – Agha Khan University, Karachi

08 – 10 January, 2016

 

Strategic Visions

The Indus Hospital, Karachi

12 - 14 January, 2016

 

Strategic Visions

Marriott Hotel, Karachi

15 – 17 January, 2016

 

Stress Management

Best Western Hotel, Islamabad

16 January, 2016

 

Sleep Management

Best Western Hotel, Islamabad

17 January, 2016

 

Where Do You Want to Go

Best Western Hotel, Islamabad

17 January, 2016

 

Strategic Time Management

Hotel Grand Regency, Islamabad

22 - 24 January, 2016

 

Bridging Difference

Marriott Hotel, Karachi

29 – 30 January, 2016

 

Sleep Management

CIME – Agha Khan University, Karachi

31 January, 2016

 

Where Do You Want to Go

CIME – Agha Khan University, Karachi

31 January, 2016

 


 

 

 

 

 

Comment disabled by author.