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Money is the potency to attain our desires; it significantly paves the way to a content life. The statistical threshold for having enough money lies with the practice of saving as much as you spend while not compromising on any essentials. An average person is in pursuit of reaching this threshold and that is why we must understand personal Finance Management, specifically, recognising essentials, preserving money and retrieving it back.
Without keeping track of the products and services you are spending on, it can be difficult to analyse the things just in your head. For this purpose, it is encouraged to use tracking apps. Some examples include: Hysab Kytab–a Pakistani solution to secure personal finance management–and Wallet–an app with mobility in different countries. Just after a week of tracking, patterns can be interpreted categorically. This gives an output on whether you had needless entertainment or spent less time messing about in the kitchen.
A good practice of limiting your expenditure is to set goals and priorities along with reminders for extra expenditure on miscellaneous items. A good rule of thumb to start off is to follow the infamous 80-20 rule–80% for spending and 20% for savings. To save money on specific items, find cheaper alternatives. Multiple blogs on the web like Food Tribune are enriched with common substitutions for commodities and cheap meals. Alternatively, if you want to cook something based on what's in your kitchen, you can try the Super cook recipe engine.
Having monthly cart lists for each week with determined budgets cut down room for extravagant accommodations. Week 1 could be restricted followed by less restrictions in week 2 and similarly week 3 and 4 to keep everything balanced.
Setting a withdrawal limit from e-wallet/bank, temporarily locking the savings account, sharing financial reports with a close friend/family and cancelling subscriptions are also effective measures which you can implement.
Retrieving money is an expense that you have to be more careful with. Same analysis of requirement, affordability and commodity is mandatory for this expenditure. Afterall, something worthy should compensate for the reduction of those figures from your savings. Payment for medical treatments and other emergencies is another advantage of saving up.
Investing is one of the better ways to multiply savings. Scrutinising market trends has proved stocks and shares to be good investment plans for the long term. In this case it is advised to start from a modest amount to understand patterns before full commitment. Short term investments should be diversified, touching upon broad categories to better understand them and find the one which suits you.
Financial plans keep changing according to the developing demands so it is always encouraged to edit your plans every few months. It is also important to understand that tough financial situations are always a learning outcome. The more you persevere, the more you grow as an individual.
Is accumulation of non-essential money a catalyst for your desires or a deterrent to happiness?
(1) Best expense tracker apps of 2023
(2) Personal Finance Management apps for Pakistanis
