Personal finance takes the principles of macro-financing and applies them to the needs of an individual or a household. In light of the global economic crisis, wallets and bank accounts are put into shackles, and debts are becoming as hard to manage as they could be. Lucky for those who have had savings since birth – thanks to parents who know their own personal finance practices. For a lot of us who are struggling to survive, there is no better way to start being conscious of money but now.
The key to managing money is planning your finances, which starts by setting your goals (both short term and long term) and closely monitoring your money flow in lieu of those goals. There are some programs that you could download and use for monitoring your money – Cash Flow, Microsoft Money, GnuCash, for instance. Some of them could even be downloaded for free.
All of the personal finance models point to one thing: continuous re-assessment of luxuries. There are some luxuries that could gain value as assets – jewelry, for instance, since gold and diamonds never lose their value. But luxuries under the big umbrella of technological devices could not be considered a long-term investment, since new technologies are introduced to the market almost every time. Purchasing luxuries, therefore, would have to be measured against the amount to be spent and your needs that these technologies respond to.
But taking charge of your personal finance does not mean you have no means to enjoy or give yourself some indulgence. There are ways to still afford luxuries without compromising your long term goals. One way of doing this is to make the most out of credit card deals – big purchases that would take you a year or so to pay without interest. The technique in handling credit cards is never to use it while you still have cash to use; meaning credit card applies only to very important purchases that are necessitated by need and urgency. Aside from credit card deals, you could also splurge on trips occasionally if airlines provide for budget flights that are way below their usual rates. You simply have to subscribe to your favorite airlines’ newsletters so you would be informed of their promotions.
Moreover, so you won’t feel that you are drastically changing your lifestyle, try to follow this very useful guideline: spend only on one luxury a day. In this case, luxury means an afternoon coffee, dinner with friends, a cheap home massage. Don’t splurge it all at once even if you have money to spend (or at least you think you still have money to spend). Put the rest of the money in your savings and you will be surprised how, at the end of a month or so, you have given yourself enough money to start a new bank account. This works especially when you are managing expenses for your family. One full treat every week could be considered your bonding time, something you will all look forward to.
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