A Second Way To Control Our Finances.
A Personal Budget puts your finances in good shape, but requires constant attention and may create a feeling of guilt each time you fail.
Most of us have tried ways to save more or at least to spend better and probably you have read articles, books or seen apps offering solutions to live by a budget. But, is it really useful to improve our finances? Yes, it is indeed but only for some people.
Budgeting requires strong motivation, discipline and paying constant attention to your banking transactions. It’s not an easy job and can produce a feeling of guilt each time you fail with your estimations.
So, which other options do we have?
To save we don’t need to live attached to a budget, but we do need information to get by. Well, you can empower yourself by raising awareness of your finances. Basically what you need is to master two aspects:
- Know Your Cashflow, by identifying what are your revenues and your expenses. The goal is to know how much you save monthly or during a period of time.
- Know Your Spending, by splitting it into essential and non-essential. That is the key element that will give you a sense of which areas you can cut down spending or make better financial decisions for the future.
Tips to empower yourself financially.
Because, a lot of us don’t have the motivation to create spreadsheets or to manually update data in a budgeting software, I propose the following tips:
- Use a mobile: You won’t have the hassle of turning on a laptop or taking your pen and notebook out to write down all your transactions.
- Download a mobile app: A reliable one that permits you to see your cashflow and aggregate automatically your bank transactions.
If we take the premises of a free, user-friendly, accurate and reliable app, I’ve personally had good experience with Emma-app (UK), Fintonic (Spain), Bankin’ (France) and Revolut. - Create financial awareness: At any moment, even when you’re chilling on the couch, try to see your spending categories and decide which areas you can improve upon in the future. Do it periodically but without deadlines.
- Create non-essential categories: Some of these apps permit you to create new categories, or you can recategorize specific merchants as “entertainment” for example, to identify all your non-essential spending. Then, the app will do all the hard work of aggregating all the spending automatically.
The bottom line
Finally, I’d like to emphasize that it is possible to improve our wealth only by raising awareness of our daily transactions, and for that you only need to know your cashflow and clearly identify which spending you can cut down on. This should be the starting point to put your finances in a good shape.
