Conquer Your Personal Finances: 2 Quick & Easy Tips (Part One)

Please note: This post is the first in a multi-part series that provides quick and easy financial tips for individuals and small business owners to help them succeed financially.

Maybe you’re not always sure what to do when it comes to money and all things financial. Perhaps you realize that your personal finances are important but don't necessarily know where to start. That’s entirely okay! It’s just a matter of taking the time to learn. Don’t worry. Personal finance can be fun, and we’re here to help!

So, with that said, why are we waiting? Let's dive in!

Why Should You Care About Your Personal Finances?

To start, you need to understand why your personal finances matter in the first place. Here’s the reason: you don't want to wake up in 15 or 20 years and be disappointed, knowing that you could have made better financial decisions earlier in your life. By then it may be too late to turn things around!

So, keep in mind that – without a doubt – the key factor in wealth building is time. You can't develop a huge nest egg for retirement, for example, a couple of years before the fact. You need a long runway to ensure that you have enough time to save and invest so you are where you need to be financially later in life.

Let your younger you take care of your older you.

Remember, the earlier you begin investing and saving, the better off you'll be.

Quick Tip #1: Make a List

So, what's the first thing you should do to better organize your personal finances?

Make a list. Simple as that. Start by listing everything you spend money on.

The best way to accurately do this is to gather all your bank statements from the last year (yes - all 12 of them) and from this year so far and categorize every transaction.

To simplify this, export transactions into Excel or CSV format from your bank. Check to see if this is an option because it makes this process much easier and quicker.

Once exported, sort by spending categories. Put all your expenses into category buckets (examples include Mortgage/Rent, Groceries, Entertainment & Dining Out, Utilities like Electricity, Water, and Heating/AC, Gym Memberships, Cell Phones, Streaming Subscriptions, Clothes, Household items, Toiletries & Beauty Products, Car Expenses like Gas, Insurance, so on and so forth – be as specific as possible).

Finally, after all your personal expenses are categorized, grab a budgeting template from the internet and input your average monthly spend in each category. To get your average monthly spend, add up all your expenses per category and divide each total by 12 if you’re using 12 months of data. If you’re using 18 months of data, divide by 18.

Doing this will give you a clear picture of your current spending habits. You need to know where you stand before you can move forward and change.

Quick Tip #2: Needs vs. Wants

We don't always want to admit it, but in our hearts, we know that some items we spend money on are wants (not needs). Like the concert tickets you recently bought. You might reeeaaaally want to go to that concert, but let's call a spade a spade. Concert tickets are a want.

Take your list of expenses and classify them into needs VS wants. You know the difference. (Needs are essentially food, shelter, reasonably priced clothing, and whatever you need to get to and from work.) And then look intently at your wants. Ask yourself: which of these can I sacrifice, at least temporarily, so I can set aside that money for other (more meaningful) financial goals? The goal here is not to suffer or deny yourself everything that’s fun. But there needs to be some sacrifice for the greater good.

Commit to building up your emergency and retirement funds, savings to start a business, or a pool of money for investing. Trust us – in the long-term, putting your money towards these goals instead of wants will pay off handsomely.

A Final Word From Tuesday Brooks Founder of AJOY

So many of us want to build a sound financial future but aren’t sure how to do it. A good place to start is to make a list of all your expenses, categorize them according to your recent bank statements and budgeting templates, and then separate them into needs and wants.

Once you can clearly see which of your expenses are wants, decide which you can live without. And then divert some (or all) of these funds to worthy financial goals instead.

Future you will be glad you did it now!

Stay tuned for more tips – plus advice about how to choose financial goals – next week!