It's easy to label saving money as "too difficult", of course, but by following these five easy steps you will be on the right track in no time and even financial freedom may be possible.
When things are running smoothly, finances can make us feel like we're on top of the world and in full control, but when things don't run so smoothly, we can also feel incredibly overwhelmed and anxious to feel.
To avoid that, this is very recognizable and that's why it's important to read on.
Money is an intensely emotional thing for many, but what you need to know is that your value is absolutely not tied to the amount you have in the bank. That said, financial freedom is something we all deserve and that's why we want you to take control of your money by simplifying your finances.
To get you started, we've collected the top five tips to simplify your finances so you can finally take control of your money and become more enthusiastic.
Understand your story around money
The road to financial freedom starts with thinking about our money story and understanding why we are the way we are when it comes to finances. Your money story is often formed from an early age and the influence of parents plays a major role here. Maybe your home was cramped when you were little, so now you save every cent you have and find it hard to spend – or maybe you spend money once you have it for fear it will be taken away?
It is important to know that your money story does not define you, but it is a very useful tool that we can use to pull ourselves up when we feel we are slipping into old ways. negative money habits.
Sit on top of your bills
Bills are part of adult life and while they can cause a lot of stress, over the years we've found that it's not so much the bills that are the problem, but our organization around them.
Bills tend to only wreak havoc if we didn't expect them or if we forgot about them, and we risk fines for doing so. This is completely avoidable if we make it our mission to set reminders (or directly) to pay for them and of course factor the costs into the budget so that they don't become unforeseen costs.
Nowadays there are many possibilities to keep more control over your finances, for example through apps that you can securely link with your bank account and then also map out all your expenses per category. You can then often note additional costs incurred, so that you have total insight into your expenses at the end of the month. Based on these insights, you can then draw up or further refine your budgeting.
Know your financial position and create a budget that works for you
Burying our heads in the sand when it comes to money is, of course, a recipe for disaster. To get our finances under control, we need to be honest with our situation and determine how much money is coming in or going out, and then create an appropriate budget.
The sooner we make a plan, the better. It's also important to remember that budgets aren't about constraints, they're about understanding our financial position and spending money accordingly – budgets that are too strict (much like a crash diet) don't work. Restrictions that are too strict are not feasible for the long term, making it difficult to stick to and therefore likely to lose the new good money habit. The goal is to set a budget that is feasible, that you can stick to and that will significantly improve your money position in the longer term!
Set goals
Setting goals is the key to getting our finances under control. Grab a pen and paper (or the digital alternative) and write down your money goals. It is advisable to set goals for the short term (1-2 years), medium term (3-5 years) and long term (5-10 years). You can then better determine what you want your situation to look like at each of these milestones.
Writing these goals down helps us see what we're actually working towards, which helps us visualize things more clearly and create plans to help us achieve those goals. Do you want to have saved € 20,000 over a period of three years? Nice goal! That means that you have to save € 128 for 3 years. Is that realistic for your cash flow? If not, adjust your goal to something more realistic and attainable to work from there.
Limit non-essential expenses
Spending money without thinking is the easiest way to get rid of your savings and goals, so it's important to keep spending in check as much as possible.
The best way to track expenses that you often overlook is to view your bank statements after a month or use an app like the one described above. For each transaction, you then determine whether it was non-essential. Probably just some unnecessary coffees "on-the-go", sometimes unnecessary online shopping and perhaps a glass of wine too much. If you pay more attention to your spending, you will know almost immediately in which areas you need to adjust your spending pattern!
Of course this doesn't mean you have to give up all the nice things in life, but provide more insight into your finances, work with achievable budgets, set goals and start on the road to a financially free life!
Resources Data Investor (link), Dollar Sprout (link), ShesOnTheMoney (link), TheMakingofAMillionaire (link)
