.jpg "Real estate market in the south of Hai Duong city is bustling")
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With the following simple spending management methods, you will not only save money but also be able to comfortably buy the things you like.
Managing your expenses means knowing how to divide your money into reasonable amounts for use. This is an extremely important step for you to be financially independent and free.
You will be less stressed about money when you know how to manage it early. Besides, when you understand the effective method of managing personal expenses, you can easily achieve the goals you plan for the future.
Pay yourself first
With this method, you will take out a certain amount of money, at least 10% of your income, and put it into a savings fund. That is paying yourself first. For the remaining amount, you can spend freely because you have saved some money in your pocket first.
This is an easy personal spending management method. Anyone can do it even if you are not interested in managing money.
The advantage of this method is that it is simple, easy to use and less time consuming. The only disadvantage is that you do not have any investment to make profit because you only have enough money, no more, no less.
Effective personal spending management methods
The 50/30/20 Rule
The 50/30/20 budget rule is a simple and easy-to-follow rule for more financial stability. With this personal spending management method, you will divide your income into 3 parts with the following ratios:
- 50% of your income is spent on rent, groceries, transportation and household bills,...
- 20% for savings and debt repayment
- The remaining 30% is for yourself to do whatever you want like traveling, shopping, entertainment,...
This is a popular method because it is easy to remember and can be applied immediately. You also have a separate amount for entertainment.
"Saw in half" method
This method is to divide your total income into two parts: the first part is for daily needs, the second part is deposited in the bank. When your cash is gone, go to the bank and withdraw half of the money you have in it, and repeat as needed. Note that this method of personal spending management should only be applied to people who have difficulty controlling their daily spending.
Cover letter method
This method uses only cash and paper envelopes. The steps are as follows:
- List important expenses each month and set a budget for each. For example, rent is 3 million, food is 2 million,...
- Withdraw cash when receiving income and divide the amount into each envelope as planned.
- When paying any amount, just take the correct envelope.
- You are not allowed to spend on that item when the envelope is empty. You are only allowed to spend when you receive the next month's income.
This personal spending management method helps you be more persistent and spend more carefully, especially for those who "spend too much" or are in debt. Therefore, this method helps you save money and quickly get out of debt.
6 jar method
This is T. Harv Eker's method of dividing your income into 6 categories in the book "Secrets of the Millionaire Mind". Here is how to divide the 6 jars:
- Necessities jar (NEC) 55%: Spending on essential needs.
- PLAY jar 10%: Spending on personal pleasures.
- Education jar (EDU) 10%: Spending on developing your own thinking, knowledge and skills.
- Giving jar (GIV) 5%: Spending on charity, helping people facing difficulties in life.
- Savings jar for future spending (LTSS) 10%: Save money for traveling, buying a house, buying a car,...
- Financial freedom jar (FFA) 10%: This amount is for business and investing your own money.
The advantage of this personal spending management method is that you have an amount to increase your income without affecting your current life. This method is also clear because your income is divided into 6 separate jars.
The difficulty with this method is that you have to keep a close eye on whether you are spending within your budget or not. Also, since there are multiple jars, it can get a little messy.
Setting a budget makes it easier to save
The 10/20/70 Method
With this method, you will basically divide your income into 3 parts:
10% savings: In this section, you will focus on your emergency fund first, then on your long-term savings.
20% for personal development to have more business opportunities, investments or have more relationships that are beneficial for your work.
70% for daily expenses as well as entertainment,...
The advantage of this personal spending management method is that you don't need to meticulously track daily spending, can increase income, and is not too messy.
Some simple ways to save money that everyone needs to know are:
- Cook at home. This is definitely not a money-saving tip, but it's something that "everyone knows" but few people do regularly.
- Record your monthly expenses. Everyone has times when they forget what they spent last month and their salary is gone. Get into the habit of recording your expenses honestly to avoid this.
- Make a shopping list. Whenever you go to the grocery store or supermarket, don't forget to bring a small piece of paper and write down the items you need to buy. Once you have finished shopping on the list, leave the store immediately.
- Don't go to the supermarket on an empty stomach. You will buy more food. Instead, go to the supermarket only after you have eaten.
- Use a wallet. Don't think that a wallet is just for keeping money, but also keep bills such as supermarket bills, electricity bills, phone bills...
According to VTC
