How to restore balance to your financial life in 3 steps
Financial challenges have become one of the main causes of worry, distress, and anxiety that afflict people today. Many months and years pass by, and they are surprised that they are in a vicious circle between earning and spending! Perhaps they think that the income is not enough and that the increase in income is the solution to regain control of their financial affairs? But the reality proves the opposite, as most people with high incomes also go around in this vicious circle and end up penniless at the end of each month!!
The vast majority wish that they could save money, but they cannot, because the needs and requirements of life are more than income, as they believe. And they do not realize the fact proven by economic and social studies that the real cause of financial troubles for most people is not the lack of sufficient money, but rather the reason is due to the lack of sufficient knowledge of how to manage the money they get.
You may also suffer from the same problem and spin in a vicious circle between earning and spending! The first step towards rebalancing your financial life is to get out of this spiral. In order to achieve this, we offer you 3 scientific and practical steps that we will reinforce with an example and figures in order to make it easier to understand and assimilate:
1. Record and track expenses
Every person, whatever his income, must know his income and the size of his expenses, not only for the purpose of saving, but for organizing his financial life. When you decide to take this step, you will start recording your expenses, in detail, and only then will you find the answer that you were not expecting. You will know the type of your expenses. And you will know where your money is going without you realizing it.
Let’s give an example with numbers so that the picture becomes clear: Let’s say that an employee (a family of 4 people) earns 2000 dollars per month, and when recording his expenses, he finds them as follows:
- 500 dollars was his expenses in the supermarket (food)
- 300 were his total expenses in other markets
- 600 house rent with electricity
- 200 nanny fare
- 150 phone bill
- $90 fuel for the car
- 700 credit card expenses (including car repair + clothing purchases + restaurants)
Then he discovered that his monthly spending amounted to 2540 dollars, meaning that he spent more than his income, and it became necessary for him to balance his income and his expenses, and this would not have been possible without his attempt to track and record his expenses in accurate detail, and this monthly statement is the first step towards balance, because this employee discovered that he He extends his hand to his income in the coming months, and this is a risk that threatens his financial security. Where he was using the credit card to cover the rest of his expenses, and it became clear to him that he had misused it, and that he had made a mistake in visiting restaurants at a time when he needed to save.
2. Expenses and Expenses Analysis
This step will enable the identification of defects and excess or wrong expenses, which are considered a small hole through which money leaks, and do not forget that a small leak can sink a large ship.
We go back to our example, after the employee registered and tracked his expenses, and after analyzing them, he found that there were two obligations that could not be reduced, namely the rent for the house and the nanny’s fee, so he started looking at the other expenses in order to follow up the leakage in them, and from here he started working to treat these leaks, and he found that the phone Gasoline and restaurant and supermarket expenses need to be monitored and saved, and he will work to reduce their monthly amount, not miserly but as a measure.
3. Planning and rebalancing
The secret to personal financial success is that your expenses are always less than your income. A monthly budget is the best way to get this done faster. Controlling your spending through advance planning enables you to fill the gaps in which money goes on temporary pleasure matters and divert that money towards more valuable things, such as forming an emergency fund because sudden expenses can be a fatal blow to you in the absence of reserve money, or the surplus money can be directed to investment Invest and improve your financial situation, get rid of your debts forever, or pump it into private capital to start a life-changing business idea.
Finally, living a successful financial life is neither easy nor difficult, and make sure that personal financial planning skills are among the most important principles for living a successful financial life, starting with learning to rationalize consumption, setting a budget, increasing income, saving and investing.