Tips For Managing Your Money Efficiently By Mike Pero

Let’s be honest - we could all use some extra advice when it comes to our personal finances.

1. Budgeting

The first step to mastering your personal finances is to set yourself a budget. A budget sounds boring and restrictive but is crucial as you need to record money coming in such as salary, pensions or benefits, versus money going out like rent or mortgage payments and other expenses.

Your budget will need a little research before you start and may also need to be adjusted as you go.Try tracking your finances for a month without making any changes to your normal spending habits and bill payments. By the end of the month you’ll have a good indication of your regular outgoings and expenses. You’ll also see how much money you have left over.

2. Check where your money goes

Once you’ve compiled your monthly bank statements and all of your receipts, it’s time to create a monthly expense list. Categorise it in a way that makes sense to you i.e. household bills, financial debts, travel, food etc. Be sure to spread out expenses that span several months, such as a quarterly gas bill.

Start to consider which expenses you can live without and where you can potentially make some savings. Would you consider living at home or downsizing to save rent? Or cooking more meals yourself and eating out less often?

3. Managing debts

Like many of us, much of your financial outlay can go towards paying back high interest debt. If this is you, ignoring the growing mountain of letters from the bank won’t make the matter go away.

Sit down and carefully record all your debts, work out how much you owe and how much you have to pay each month. Then look at ways to start reducing these debts as quickly as possible.

A good place to start is to limit your credit card spending and pay back exisiting card debt as quickly as you can. Credit card interest rates are high and you’ll often find you might be paying only the interest each month, rather than reducing your overall debt.

4. Getting help

Be honest. Don’t lie to yourself about what you spend or earn each month. Ask a friend or family member for help or, if things start to look even less rosy, seek expert advice from an independent source like a Mike Pero Adviser.

Remember there are many people in a similar boat - so don’t bury your head in the sand.

5. Saving

So you’ve set a budget, tracked all of your financial income and outgoings, worked out how you can cut your spending and are managing your debt. Now it’s time to see how much you can save.

The aim is to save as much as possible by setting realistic goals and sticking to them. Set the money aside or make it difficult to spend; try using cash on a night out, instead of your credit or EFTPOS card.

Savings will bring you closer to your future goals whether they be travel, a new home or a new car. They will also provide you with peace of mind. By having some extra money set aside, you are able to cover yourself in the event of unforeseen circumstances.

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