The subject of money is one of the subjects we often pay less attention to in our everyday’s life but at the end of every year, reality always speaks for itself. Most of us think money is just money and we can do nothing about it to track our expense and have a good financial record. How we think and feel about money can easily be sum up from what we were taught in school about money or what we’ve learned from our society. Sometimes we leave the subject of money to only those we tagged as millionaires in our society. But by consciously shifting our paradigm about money and tracking our daily expenses, we can easily come up with a better plan to build a good financial record within a short period of time. We can achieve this, through budgeting and allocating of our money before our paycheck drops into our bank account. And a budget is a simple plan for managing your money.
The idea in this post is to enable you design a good financial strategy that would enable you track your expense and enable you build good financial record after the lockdown. And for the past few months, I’ve stretched beyond what I called normality way of handling cash and went through some conscious financial research to come up with these principles I’m going to share with you in this post. The principles have worked for many and they are currently working for me at the moment, and I have no doubt that it will still work for you, if you consciously apply them in your daily life. Without wasting much of your time, let me get you started with the principles.
Pay Yourself First Savings Account
The principle of paying yourself has been taught by many financial gurus but most people don’t practice it. This principle states that on every dollar or naira (depending of your country’s currency) you make daily, weekly or monthly, some percentage of your money should be deposited to a separate bank account you don’t use for expenses. The percentage could be 3%, %5, &7% or 10% but let it not be more than 10% of your income. Pay yourself first is an investor mentality and phrase used in financial education that means automatically crediting a specific savings contribution from each paycheck at the time it is received. In other words, paying yourself before you begin paying your monthly living expenses and making discretionary purchases. And if you are using the principle of pay yourself first method of personal finance, you may opt to put your money in a range of saving vehicles, depending on your financial objectives.
The principle is very simple, but the problem is that it’s hard to do. Paying yourself first and budgeting the remaining part of your money will give you some positives feelings about money and something to fall back on when things get tougher. You don’t have to be rich to feel rich, but having some money deposited in a separate account of yours makes you feel rich. This principle has worked for many and it’s still working for me since the first day I learned about it till now. Back then, it was a tough decision for me to make and follow up with but I did because I needed to track my expenses and have a good financial record for myself. You don’t have to start big by saving big amount of money at the beginning, but you just have to start small and build up from there. Paying yourself first simply involves building up a retirement account, creating an emergency fund, or saving for other long-term goals, such as buying a house of your own in the future.
Creating An Expenses Account
The second principle is creating an expense account where you deposit the money you’re going spend before another money will come. In this account, I suggest that 60% of the money should be deposited here because of high volume we expense we run daily or weekly. Expenses are anything you spend your money on. To track your expenses, you will need to write down every money u spend. And having enough money in your expenses account will give you room to pay your bills and take care of all your personal needs which include feeding, water, light telephone/ television subscription and health bills within the month. You must keep enough money for consumption to enable you take care of your life and things that matters to you. And keeping enough money in your expenses account doesn’t mean you must spend all the money there by buying that are not necessary or you don’t really need.
How people spend their money is a good indication of their values in the real life, and most people can spend all they see once they received their paycheck. But my idea here is to help people focus their mind on spending their money things which are necessary to them once they get their paycheck. And as you start to track your spending on your expenses account, it is important to break your spending into different categories. There are two main categories of expenses: essential and non-essential expenses. And the essential expenses are expenses that are required for our everyday living. Non-essential expenses are expenses are the extra things you spend your money on after receiving your paycheck. For example spending on clothing, books, movies, magazines, video games, dinning out, gifts, Snacks, candy, shoes, etc . And after tracking your expenses, you will be able to set up an estimate of your budget each month, based on the expenses information you have been tracking.
Creating An Emergency Savings Account
This is the third principle on tracking your expenses to build good financial record after the lockdown. This means creating an emergency fund in a separate bank account with money set aside to cover unexpected expenses such as unforeseen medical expenses, home-appliance repair or replacement, accidental car damage and been fired if you’re working for someone in this type of account, I suggest you deposit 10% of your paycheck once you received it. And this emergency fund create a financial stability that can keep you afloat in a time of need without having to rely on credit card or taking a high interest loans to fix your emergency. It is also important to have this separate account where you keep some certain amount of money for unforeseen situations that may arise. One of the first steps in climbing out of debt is to give yourself a way not to go further into debt.
Everyone needs to save for the unexpected. Having something in reserve is not a bad idea and also it can mean the difference between weathering a short-term financial storm or going deep into debt. I suggest you start building your emergency funds with your next paycheck if you don’t have any yet.
Creating Your Dream Savings Account
A dream account is the fourth principle in tracking your expenses to build good financial record after the lockdown. I believe each of us has a list of dreams that we want to accomplish before we retire or die which required a big amount of money accomplish. And it’s important to have a dedicated savings account for your dreams. In this type of account, suggest saving up to 10% of your paycheck once you received it. Your dreams could be to travel the whole word, own your own house, car, landed properties, etc. which is good to dream about.
And savings to accomplish your goals doesn’t have to be made into something difficult! In fact, it can be quite the opposite. When you’re saving for your dreams, it is exciting and rewarding because you’re working hard to get your dreams accomplish. Like traveling the whole world when you’re still a student is a unique opportunity that only comes around once in a lifetime. It’s an opportunity to experience to meet people from around the world and learn from them. It’s also an opportunity to experience things you would never experience in your everyday life routine if you didn’t go for it. And going for your dreams could be an opportunity to explore and discover new things about yourself and the universe.
It’s important that you have a dedicated savings account for your dreams. The reason behind this is that it will separate you from your current account you used for other things. And being able to segment your savings account and accept that you might have a bit less money to spend on other things in the month is a good thing. Your dream savings account plan might not have immediate value but if you can wait for months or however longer plan to save more money. So, do the right thing through self discipline and set up your dedicated separate savings account for your dreams. Don’t be tempted by short term gains.
Creating Your Charity Savings Account
Charity Savings account is the last but not the least principle in tracking your expenses to build good financial record after the lockdown. Giving back to our community by serving the highest good of all and supporting religious organization where obtain our spiritual guidance is one the ways to be grateful to our infinite provider. And creating a savings account where you deposit at least 10% of your paycheck for charity is not a bad idea. Because donating to the causes you care about not only benefits the charities themselves, it can be deeply rewarding for you too. And the knowledge that you’re helping others is hugely empowering and, in turn, can make you feel happier and more fulfilled about yourself in the long run. Research has identified a link between making a donation to charity and increased activity in the area of brain that registers pleasure- proving that as the old adage goes, it really far much better to give than to receive.
Having the power to improve the lives of others is, to many people, a privilege, and one that comes with its own sense of obligation. And acting on these powerful feelings of responsibility is a great way to reinforce our own personal values and feel like we’re living a way that is true to our ethical beliefs by serving the highest good of all. Lastly, your charitable donations can inspire your nearest and dearest to give to causes that are important to them also. You can also donate for the building of this website if you’ve been inspired by free articles I post to the website through my donation button, either local or international donations are accepted and will be appreciated. So, start giving today!
Budgeting helps you determine how much money you spend on monthly basis, and to whom you are paying that money to. To do this and build good financial record after the lockdown, you will need to start tracking your expenses starting from today. By doing this, it will help you have insight into where your money is going, and also help you determine where you might be able to spend less and save more as this would enable you have a better plan for your future needs. Note, tracking your expenses will help you create a personal budget which is the first step in building sound financial record and money management skills.
Until Next Time, Live Exceptionally!!!