You make money but you do not grow financially in any way. That is very serious. You need to find a way to manage your expenses in a much better way. In this article, we will try to shed some light into understanding the relationship between your income and your expenses, so that you can become a good manager of your own money.
The first step is to determine your income. Find out how much you earn monthly excluding all the necessary deductions such as taxes. Be as thorough as possible. It will help you understand how much you are worth. Include not only money from your formal employment but also all incomes from any other sources. If you want to know whether you are on the right track, just make sure your income is always more than your expenses, if not then you need to review your options.
Here is a good video on the topic:
Once you have known how much money you have, write down all your expenses, basically every item or service you spend your money on. The expenses will include things like
- Car repair
- Baby sitting services
- Hair care, spa and others
- Insurance premiums
- Rent or mortgage
- Car loan
When you clearly look at your expenses, you can identify a few if not many things that are an unnecessary burden to your financial status. Reduce or eliminate them completely. For instance, that Starbucks coffee is not going to save you money. Make your own coffee at home.
Energy bills account for a considerable part of your expenses. To reduce these bills you can replace your ordinary windows with improved ones that work towards minimizing energy consumption. Instead of using a water heater with a tank, try using a tankless water heater. It is more efficient in energy consumption. Do not overlook that drop-by-drop leakage in your pipe system, have a plumber fix it before your water bills rise. The dishwasher is useful but you should only use it when you have a full load of utensils.
Invest in appliances that save energy. There is always something new that is better and more energy-efficient than the old-fashioned appliances. However costly a new appliance could be, buying it will save you money on your energy bills for many years. If any of your appliances has a light indicator, unplug it to cut energy bills. It could be a repetitive activity but very beneficial in the long run.
You can never dictate the weather and whatever season it could be, you would not want to be inconvenienced. Therefore, improve your insulation and repair your roof to ensure no energy is lost. Insulation and roofing systems could cost you a lot of money in maintaining them unless you upgrade them.
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