Know your expenses and set your financial goals | by Alex Artenie | Apr, 2022

Do not save what you have left after spending, but spend what you have left after saving Warren Buffet

Know your expenses by ARTInvest
Know your expenses. Composite image by the author using Canvas

Spending is the next aspect of personal finance to discuss next. winner. When you earn, you also spend. In fact, as discussed in the Previous postdesire to be able to spend.

That is, while winning is the starting point of personal finance, is not its end. You have needs and desires in your daily life to attend to. Although you may be earning enough to cover all of your needs and even satisfy some of your wants, many people, unfortunately, cannot afford it.

As a result, you must be systematic in your spending. After all, you want to spend in such a way that you can save and invest for the future. So for that, you may want to develop a personal spending plan.

Know your expenses and set your financial goals | by Alex Artenie | Apr, 2022 0*ZrYsGDbunwEqSpca
Save or spend. Photo by dude on Canvas

A personal spending plan, similar to a budget, is a summary of your cash inflows and outflows. It highlights your income and expenses, broken down into your needs and wants.

You should maintain a personal spending plan for a number of reasons, including: It helps you structure your finances by monitoring your spending patterns and automating your savings. With it, you can restrict your spending, live within your means, and achieve financial freedom much more easily and quickly.

To be effective, a personal spending plan must have some essential features.

Designed in the format of a traditional budget, it should be tailored to your individual needs while being flexible enough to accommodate major changes that arise from time to time. Also, it should be so detailed that you include information about every item you buy.

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In this way, it will help you optimally allocate your scarce resources to your important expenses and eliminate the irrelevant ones that can prevent you from reaching your main financial goals.

Also, a personal spending plan must be realistic. That’s why it’s recommended that you track all your expenses for at least a month or two before trying to create a comprehensive spending plan for them.

Finally, for a personal spending plan to be effective and complete, it must include sections for budgeting, banking, insurance, mortgages, credit management, Y tax.

Know your expenses and set your financial goals | by Alex Artenie | Apr, 2022 0*8y05NRrbruXVCWcD
Set your financial goals. Photo by designer491 on Canvas

In life, a man without goals is a man without direction. The same goes for personal finances. He should use his personal spending plan to develop and detail his financial goals. Those goals may include financing his graduate education, buying a home, saving for emergencies or vacations, spending on entertainment, and planning his savings and investments.

Having clear financial goals is helpful when creating a personal spending plan. It gives you clarity and makes it easier to work towards fulfillment. Also, when creating your spending plan, you should consider vital monthly expenses, such as food, rent, utilities, Y goods

Your emergency fund, made up of savings that can cover at least three months of your expenses, is also an important element to include in your personal spending plan. An emergency fund can help you avoid credit card debt in case you lose your job or have a medical emergency.