Our lives in the last decade or so have become so fast that it has become very difficult to maintain a record of all the expenses that we incur. People today find it very hard to maintain any kind of savings, and the handful who do manage them do not know what to do with them. Living on this planet is not free at all.
The situation demands from you to know exactly where you stand financially. This way, in case there is an emergency and you require cash, at least you would know where you can generate it from. To start off, you need to realize that you are worth nothing and everything you own is your asset.
You want to know where you stand financially and for this, you have to add up the financial worth of your assets and subtract all your expenses from this number. Your assets constitute anything that you have and can be sold for money; some common examples are your house, your car, your salary and a trust fund.
The second step is to find out your total expenses. Sweets bought from the roadside stall, school fee, electricity and gas bills, shopping, groceries, and basically anything for which money leaves your wallet is an expense.
A good financial situation is where the assets exceed the expenses, but if that is not the case, and the expenses come out to be way more than the calculated assets, the mostly likely justification is that a lot of things were not counted as assets. This can be because most of the things you own have been with you for a while, and therefore, you have never considered them to have any financial value. The fact is that everything is worth something, even the gifts that you get from your family and friends.
It takes a long while to note all your expenses for the first time and the best way to do it is to maintain financial books and update them regularly. Doing this will help you know how you spend your income and what are the biggest expenses you pay for. Most of the time, people are spending more than they are earning. The gap between the income and expenses in these cases is mostly covered by loans. This is a very dangerous thing to do. Taking a loan means that, instead of saving, you are about to spend something that is not yours and cannot be covered through your income. The only way to fix this kind of situation is to try and reduce your daily expenses, and save money which can be used to pay back the loans. There is a very high chance that you will start cut backs and go a bit overboard, get frustrated by the resulting situation and give up on the whole idea. The best solution in these circumstances is to start budgeting. The plan is to commit yourself to a fixed amount to spend every day, month or year, depending upon the nature of the budget. Monthly budgets are the most effective way to get out of bad financial situations.
Majority of the people end up spending more as compared to what they earn. Reasons for this behavior might be different, but the standard way to make it work is through a loan. Nothing hurts your financial situation more than a loan, because now you are ready to spend the money that belongs to someone else, money that your income cannot cover. You can obviously not save anything if you have taken a loan. So. to get out of this situation, you need to cut down on your regular expenses, and pay back the loan through the money you save. Once you start the cut backs, you will normally end up going to the extreme, and after getting annoyed by the whole situation, give up the idea completely. The only way to make it work is through budgets. Budgeting means that you are setting daily, monthly or yearly quotas for yourself, most practical would be a monthly budget that you strictly follow. This way you can prioritize your expenses and discard the unnecessary ones. The money you save can be invested. Doing all this will help you take control of your financial situation in a better way. - 29970
The situation demands from you to know exactly where you stand financially. This way, in case there is an emergency and you require cash, at least you would know where you can generate it from. To start off, you need to realize that you are worth nothing and everything you own is your asset.
You want to know where you stand financially and for this, you have to add up the financial worth of your assets and subtract all your expenses from this number. Your assets constitute anything that you have and can be sold for money; some common examples are your house, your car, your salary and a trust fund.
The second step is to find out your total expenses. Sweets bought from the roadside stall, school fee, electricity and gas bills, shopping, groceries, and basically anything for which money leaves your wallet is an expense.
A good financial situation is where the assets exceed the expenses, but if that is not the case, and the expenses come out to be way more than the calculated assets, the mostly likely justification is that a lot of things were not counted as assets. This can be because most of the things you own have been with you for a while, and therefore, you have never considered them to have any financial value. The fact is that everything is worth something, even the gifts that you get from your family and friends.
It takes a long while to note all your expenses for the first time and the best way to do it is to maintain financial books and update them regularly. Doing this will help you know how you spend your income and what are the biggest expenses you pay for. Most of the time, people are spending more than they are earning. The gap between the income and expenses in these cases is mostly covered by loans. This is a very dangerous thing to do. Taking a loan means that, instead of saving, you are about to spend something that is not yours and cannot be covered through your income. The only way to fix this kind of situation is to try and reduce your daily expenses, and save money which can be used to pay back the loans. There is a very high chance that you will start cut backs and go a bit overboard, get frustrated by the resulting situation and give up on the whole idea. The best solution in these circumstances is to start budgeting. The plan is to commit yourself to a fixed amount to spend every day, month or year, depending upon the nature of the budget. Monthly budgets are the most effective way to get out of bad financial situations.
Majority of the people end up spending more as compared to what they earn. Reasons for this behavior might be different, but the standard way to make it work is through a loan. Nothing hurts your financial situation more than a loan, because now you are ready to spend the money that belongs to someone else, money that your income cannot cover. You can obviously not save anything if you have taken a loan. So. to get out of this situation, you need to cut down on your regular expenses, and pay back the loan through the money you save. Once you start the cut backs, you will normally end up going to the extreme, and after getting annoyed by the whole situation, give up the idea completely. The only way to make it work is through budgets. Budgeting means that you are setting daily, monthly or yearly quotas for yourself, most practical would be a monthly budget that you strictly follow. This way you can prioritize your expenses and discard the unnecessary ones. The money you save can be invested. Doing all this will help you take control of your financial situation in a better way. - 29970
About the Author:
Edwood Woodward is a financial consultant. You may consult with him to get debt consolidation services and get his opinions to make financial decisions of your life at http://www.moneysolve.co.uk.
