How to spend your salary
learn the simple but efficient ways you can spend your salary as a low income earner and still have enough to save and the end of each month. This article would be based on how low income earners can spend that income and still save money
There are a lot of high income earners who can earn about six figures a year that are still in debt.
Being in debt is not only reserved for low income earners but also the high income earners can even accumulate more debt than what low income earners accumulate from time to time.
For instance you might hear that your favourite celebrity is broke. This Might not always be because the amount of income they earned when they were “trending” was low but it might be because of poor financial management.
Not being able to manage your finances properly might need you to be broke even if you earn a lot of money.
For low income earners they might not have the luxury of employing the services of a financial advisor or any financial expert to help you manage your finances.
But this doesn’t mean it is the end of the world for low income earners. This is because without proper plans,management and savings everybody can lose any amount of money no matter how big or small that amount is.
Although there are other factors that can result in the loss of money, one main factor that can prevent the loss of money is a proper money management system.
A money management system is mostly how to spend your income, what to avoid spending your income on and how you increase the income as a whole. This does not matter even if the income generated is low or high.
This following would focus on how to properly spend your income to avoid being broke.
How to spend your salary – Get a Retirement fund
Saving for retirement should be the number one thing when it comes to a proper money management system.
People generally overlook this because they might be in the early 20s or 30s and leave you until your retirement is about 20 or 30 years ahead of them.
People with this kind of mentality always say they are going to save for their retirement when they hit their 50s.
This means during their youthful ages they spend most of your money recklessly without thinking of saving for their retirement or the future.
Most people do not even think about saving for their retirement because they feel they are still young and have a long way to go before they retire.
People in this situation would go up, hit their 50s or even 60s and suddenly realise they haven’t saved a penny yet for their retirement.
Some people who even think of saving for retirement might End up not receiving a penny towards their retirement because they feel they do not earn enough and they are waiting till they are probably made a manager before they start saving for retirement.
The best thing people have to do in this type of situation is to always set up a form of retirement fund for a percentage of the income that is automatically directed into.
This method requires a lot of self discipline and with perseverance it can easily be done.
People must look out for the best financial service or institution that offers these kinds of services.
People must also do their own investigation on this financial service to ensure your money would be safely kept. In doing so a person would be able to fully trust that financial institution to be able to constantly deficit a percentage of the income they receive towards their future or retirement.
This is because this kind of investment would definitely have bits on apps and downs so people must be careful to ensure any financial institution they work with is in full compliance of laws and regulations.
Spend money on necessities – How to spend your salary
To properly manage your money or income a person must ensure they spend your money wisely. One way this can be done is by ensuring you always set money aside from that income you receive for the necessities only.
What are these necessities? How to spend your salary…
These necessities are the basic needs of life that a person cannot survive without. These include food, shelter, transportation, utility and healthcare.
Nobody can live without food so it is one of the most important necessities of life.
Everyone also needs a roof over their head so when you receive your income you must think about where you live as well as the other costs such as utility costs.
The next thing a person should consider is the means of transportation.
A person must consider how much they spend to travel or commute to where it is necessary such as to school, work, shop/market and other necessary places.
A person might decide to go on a vehicle, use a bicycle or use public transport or even walk to the various places of interest.
A person can develop the self-discipline to say I would walk to work today to avoid spending on fuel or other transportation costs.
Another important thing which forms part of the necessities of life is healthcare.
People channel a percentage of what they earn to fund their healthcare.
Since without good health, you cannot continue to make money.
A person must ensure that a certain percentage of the income is channelled solely for these necessities of life.
The best way to do this is to list all your necessities of life and find out how much you spend on average in a month.
After that you can find out if you can make any reductions to these costs.
You must determine if what you consider necessary is really necessary.
That is you must consider what you really need and what you want.
After you determine what is necessary and what is not you will be able to find out what you can cut off.
When you are able to do this you might even be able to save a bit of money that can be spent on other areas of your life such as paying debt.
Getting an Emergency Fund – How to spend your salary
Another important thing every one must consider is to set money aside that would mainly be for the purpose of emergencies.
Emergencies are bound to occur and having money saved purposely to meet these kinds of needs is one of the smartest things that can be done.
People must consider the size of your family when it comes to saving for emergencies. For instance if you have kids you must consider saving more towards emergencies since your kids depend solely on you.
This money must be in such a way that it can be easily accessible in times of emergencies.
A person must develop self discipline to ensure that money they save towards this emergency is not diverted to find other stuff which might not be considered as emergency situations.
Emergency funds must not be taken for granted even if you earn very little income.
This again is not meant for only the rich.
A person must have an emergency phone even if they are still in debt.
Stop trying to look rich – How to spend your salary
“Stop trying to look rich” does not literally mean you should wear rugs or trade in your lifestyle for another.
It simply means you Should be live within your means.
People generally like to dress or appear like other people Whilst some other people also like to please the public by trying to live like they are millionaires even when they are totally broke.
For instance you might be a Beyoncé fan but it doesn’t mean you must wear exactly what Beyoncé is wearing if you don’t have the means to look at it.
Another instance is if all your friends drive a particular car or live in a particular neighbourhood you must NOT expect to either drive a similar car or live in that neighbourhood when you honestly cannot afford that lifestyle.
You must understand that life is not a race and if your friends can afford such luxury items today you may also be able to afford it in your own time.
When people succumb to such pressures, they might end up borrowing money which they might not be able to pay for to fund that lifestyle.
If you honestly cannot afford the “rich look” do not force it on yourself. How to spend your salary?
Saving for the future – How to spend your salary
To properly be able to manage your income and finances are not that important step that must not be omitted is to set some money aside and save for the future.
The best savings must be totally different from your emergency fund account.
This is going to be the amount of money you can rely on in times of trouble for example in the cases where you lose your job.
If a person has been saving or setting money aside specifically for their future, then they would be able to financially support themselves to some extent until they are able to bounce back into the working world.
Setting up this kind of savings is really beneficial because in the case where a person may lose their job they wouldn’t be able or suitable to be accepted for most forms of loans.
People who have the habit of having a future savings account going to be able to live without any financial assistance to a certain an extent before they are able to get a new job. How to spend your salary?
Investing – How to spend your salary
Another step that is not to be omitted in the money management system is investing.
No matter how much you earn a person must be able to channel a part of their income into investments.
There are so many investment options out there, people must do their checks, research and investigations before choosing a particular investment option to invest in.
With investment people will be able to grow the income and they might be to earn extra money aside from their regular income. How to spend your salary
Paying you Debt – How to spend your salary
How to spend your salary? The final step in the money management steps is to ensure that all debt is paid.
As much as people may try to avoid being in debt there are some circumstances that would call for a person to borrow funds to solve an immediate financial issue.
And example of such a depth can be student loans
People must always ensure that they pay all the debt they owe.
If a person is able to properly manage your finances, paying debt would not be much of a big problem.
If people are able to properly manage their money and channel their money properly they would be able to channel a part of the income to pay their debt.
People must always remember to take responsibilities for all their action and this include dept as well