Keeping track of your own finances can be a challenge – especially for the self-employed as well as for normal investors. With these tips you can still create order out of chaos.
The new year is here – and with it the will to change the old and create the new. Above all, you want to get rid of bad habits and create order out of chaos. This is necessary not least when it comes to finances, which we often lose sight of due to the celebrations at the end of the year. This way you can have a successful start to the new year with your finances in order.
Cash register crash!
As a first step, we recommend doing a checkout. “Get an overview of your monthly income and expenses,” recommends financial expert Katja Eckardt in her personal finance guide entitled “Look Good Rich. Your Financial Workout.” She adds that this should definitely be done in writing. “Do you spend more than you earn? Are you always broke in the middle of the month?” These are the unpleasant questions you have to ask yourself when you have a serious run-up in your finances. But getting your finances in order is important. Knowing that you still have to do accounting, taxes or filing receipts can be stressful. For self-employed people, sloppiness in these things can even lead to real problems when working on certain projects. If, for example, high additional payments are made, these can prove to be a threat to your existence.
Choose a system
After the cash collapse, you should choose a system that allows you to keep track of your finances and record them. You can use different means for this: While some people prefer to record their income and expenses digitally using a smartphone or Excel, others prefer to use the traditional notebook. The expenses can be divided into different categories such as food, clothing, furniture, etc. It’s best to choose a variant that you find clear and that you can use weekly, monthly and yearly.
Calculate debts
For good budget management, it is crucial to know and keep an eye on your own debts. Experts differentiate between “good” and “bad” debts depending on the level of interest and the value of the item – but what they have in common is the fact that it is money that belongs to someone else and has to be paid back. By adding up all your debts and comparing them with your income, it’s easier to calculate how best to repay them.
Consider savings options
In order for this to be successful, it is advisable to think about savings options and avoid unnecessary expenses. Do you really need a new cell phone? Do you have to go to the cinema every weekend? Wouldn’t it be more profitable to buy the same products at a cheaper grocery store? Cutting unnecessary expenses is easier than defaulting on payments later. It’s best to set a fixed amount that you want to spend weekly or monthly and leave your credit card at home. This is the best way to curb impulse purchases.
Consider investment options
If you have money left over at the end of the month that you can put aside, you should consider whether it might be better to invest it in the stock market instead of parking it in a savings account. Given the current low interest rate environment, it is difficult to generate income with savings accounts. If you have not yet looked into investment options, you can consult an expert. It is important to clarify what risk type you are. In her guide, Eckardt recommends asking yourself the following questions: “Are you more anxious? Or do you like dynamics and see risks as a particular challenge?” Depending on the answers to these questions, you can then decide which investment is suitable for you.
Editorial team finazen.net