Start by going through your monthly bills. Examine where your money is heading each month, what your total balance is and how much of your budget covers your monthly credits and loans. Most importantly, get updated on the papers you signed with your bank. What’s the interest rate of your loan or the compound interest rate of your credit card debt?

Once you learn all the percentages you owe, it’s high time you calculated your net worth. Your net worth is the sum that you remain with after you deduct the debts from the total of your assets. So assets minus debts equal your financial status.

Going through this step might be nerve-racking and time consuming, but it’s the only way to properly manage your personal budget.

Get to Know Your Budget

“Divide and conquer” is the ideal offensive approach to a well-managed personal budget.  Calculate the value of your total monthly revenue and segment it into clearly delimitated categories.

• Monthly Tax Budget. Gather all the bills and debts you have to pay on a monthly basis.
• Monthly Personal Necessities Budget.  This budget covers your bare necessities like food, rent, hygiene products and clothes. Calculate the total sum you spend on these items on a monthly basis. However, this budget is not intended for your luxury indulgences like dinners at the restaurant, gym membership, saunas, beauty salons visits etc.  These are not your basic necessities, even though you can’t imagine your life without them.
• Monthly Savings Budget. Economy is always taking into account the unexpected life events and so should you. As a responsible grownup, you can’t go on in life without emergency or retirement savings. It is recommended to assign 20% of your budget to your emergency savings.
• Monthly Lifestyle Budget. And finally we get to the fun budget. But this needs a prioritizing system also. Firstly, cover the luxury items that you built your lifestyle around like saloon visits or gym memberships. Lastly comes your life indulgences like cinema tickets, restaurant dinners or leveling up your wardrobe.

Become a Control Freak with Your Budget

Now that you have the basic setup for your budget, you need to also settle how and when to spend it. A monthly schedule for your budget is a good way to start creating your good financial habits.

Begin your month by focusing on the three first budget categories: Tax, Personal Necessities, and Savings. There’s no feeling more rewarding than having the rest of budget to spend the way you want to for the rest of your month.

Breaking bad habits though is not an easy task. You can fall for the usual traps like temptations or postponing. So start your new financial management by tracking your money through useful online tools that the Internet provides us. There are some apps like Mint or BillGuard that help you monitor your financial activities and making sure you are on the right track.

Spread Your Plans Around You

Building good habits is hard when you have an active social life. Watching your friends enjoy the expensive yet fabulous safari trip without you is definitely painful. There’s no reason to give up though.

Talk to your loved ones about your plans and they will understand you. Better yet, you can even convince them to join your club and start their own financial management. Having your buddies or partner along the way will make your changes more bearable.

Involve Your Career

Review your work options. Is there any ground you can take advantage of to earn that raise you are looking for? If you have acquired good work results and you showed loyalty toward your company, you should build a strong case and talk it over with your manager.

If you haven’t gained a financial stability yet, this means that the path you are currently on is not really working for you, so you might consider changing your job. For example, career opportunities in the retail sector can prove to be highly beneficial for you as most of them offer a fix competitive salary plus bonuses based on your sales number.

So make sure to reevaluate your experience, skills and the opportunities the job market offers you, and choose the right option for you and your budget.

Reward Yourself

Managing your finances shouldn’t be another stress source for you. It’s a part of your new lifestyle and it comes with a great deal of benefits.  To reach a point where you can adjust the resources you have to your needs is an important milestone in your life and you should celebrate it.

Adopt a positive mindset towards your finances and concentrate on the improvements triggered by budgeting. Spoil yourself whenever you have the chance!