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Financial Literary Skills You Need for Better Financial Management

by Roveen Anyango
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Each day of our lives, we are looking for ways to improve our financial situation. Unfortunately, many of us never get to learn how to do this and are left with regrets later on in our lives.

However, in this article we look at ways that actually help to manage your finances better.

Identify your monthly expenses

The first thing you want to do is to identify where much of your money goes. In a notebook or even on your note app, write down every expense each month. There are two expenses you will have: variable and fixed expenses. Your fixed expenses include things like rent, water and electric bill, loan payments and such. Variable expenses are those that fluctuate.

Set the two expenses separate and under the variable expense, begin to look at areas where you overspend. Be honest with yourself and start cutting back on things you don’t need.

Increase your savings

Once you cut back spending on expendable variables, look to put that money into your savings account instead. You could also put that money in a retirement plan, or in an appropriate investment which will mature when you retire.

Alternatively, you can add the reduced expenses to your current savings so that you have enough money for immediate emergencies.

Operate on a budget

Once you have an idea of where much of your money goes, it becomes easier to create a budget. Now, many people assume that budgets are these crazy, inflexible write-ups that make you miserly but that is not true.

Your budget is there to help you know the important places to spend your money and then, when there is some left, spending it wisely on anything else you want. You can make your budget as flexible as possible as its point is to ensure you do not overspend.

Financial literacy helps you make the best financial decisions while also still enjoying the money you make. So, don’t be afraid to keep track of your money in fear that you may not want it. You will still enjoy your money; you just will be more intentional about it.

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