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Comprehending personal finances is overwhelming, especially if you have just started. It is challenging for you to know how to manage your money, pay off debts, how and where to invest. Though this task seems difficult, it is not impossible. There are some basic steps you can follow when it comes to managing personal finances, saving for a rainy day, and planning for retirement and investments.
Start making good choices with knowledge
カヴァン・チョクシ is an esteemed entrepreneur well-versed in financial and business matters. He is fond of technology, travel, and photography as well. When it comes to the basics of personal finance, he believes you must understand it first to become confident with your choices with it.
He recommends you should keep the following in mind for better personal finance management-
- Gather all your financial information and statements– The first step for you to manage personal finances is to create a budget. For this, you should gather all your financial statements like bank statements, credit card bills, statements for your investment accounts, etc. Collect them and make a monthly budget.When you have everything in front of you, it is simple for you to prepare an accurate budget. A majority of people make a monthly budget- they take into account their income and expenses for the month. You can also do the same for your needs.
- Record your income– Like financial statements you own, the next step for you to do is to record your income for the month. Again, gather all the financial data you have. Make a note of the monthly income you bring home, and do not forget to add any sort of side job you do as well. In case your income differs from month to month, it is helpful to figure out the average income for every month for the last six months.
- List your fixed expenses every month– Go through your financial statements and make a list of the fixed monthly expenditures like rent, car payments, electric bills, credit card bills, etc.
- List variable expenses for the month– You need to record variable expenses every month as these expenses vary. They are not essential expenses, and you can adjust these spending patterns.
- Make a sum of the expenses and income-Sum up the total and variable, fixed expenses, and income. You should ensure your income is more than your expenses. Once you have the whole picture, you can make adjustments to your budget and manage your personal finances better.
According toカヴァン・チョクシ, you should review your budget every month. Take some time and review your spending patterns in the last months. Determine whether you have stuck to your budget or did you do off track. In this way, you can assess your situation and make yourself disciplined in the process.