How to Balance Your Income and Expenses

When I was young, I knew nothing about spending within my ability to make money. I did not think too much about why I wanted to buy these clothes or this cosmetics or if I really needed them. The first thought came to my mind at that time was that I wanted something and wanted to buy it for sure.

After all these years, I have kids and have a lot of experiences about buying things like the groceries and the electrical appliance in the kitchen. I start to realize that sometimes I would put away what I buy in a room or a closet for a period of time until I completely forget about it. There are many things left there without notice. Then if I need something, I would buy the same thing again. I believe you would have the same situation as well. What turns out to be is that you buy a lot of unnecessary or duplicate goods and that might cost you a fortune. This would happen over and over again until you are buried by all the things. That is pretty terrifying and scaring. Even worse, you might have to ask for a loan for it because you spend over your earnings. You cannot balance your Income and Expenses

In the long run, you would never possibly predict how much you will pay for yourself, your family, and your friends possibly. It is quite crucial to how to manage your earnings and saving and how to make the best of it no matter how much you have now, poor or rich. Many people would not think it necessary for many excuses. For example, some would think that they have so much money and do not have to pay attention. Some would think that they have too little to manage and maybe some other time later.

How hard could it be to balance your income and expenses? You simply make money and buy things. There is a lot to learn no matter in a psychological or practical way. Why is that? Most people do not think that it would be a serious problem. I just buy things what I want which makes me happy and pleasant. I want to have it. It is all right that I do or do not have the ability to pay for it. This is not the correct attitude.

When you are teenagers or college students, you have more senses of money and would like to buy more things without thinking where your money comes from. Maybe your parents or grandparents would pay for it. Maybe you have a lot of allowances that your parents give you to spend. If it is not enough, you can ask your mom to give you more and say that it would not happen again. Alternately, it is not a good solution and you still have to be responsible for yourself. By the time you become a freshman and start to make your money. You would realize that it is not the story you think. When you get married and have children, you need to know more about how to spend your money wisely. However, it is so strict that you have stripped all the fun out of shopping, eating at fancy restaurants, having the latest iPhone or traveling overseas.

Let’s take a look at some tips to help you have the second though before you go shopping.

1. Keep a track of your spending
Every time when it is the end of the month, you would find out that your salary does not have much left. You may have no idea of where the money goes or you can hardly recall how it happens. Day after day, this kind of situation remains. You would like to change without knowing how. Start to keep a track of your spending is very crucial and helpful. Small amount payment may seem little but a pin a day is great a year. You can never underestimate the power of it. Nowadays, there are many software and app to assist you to keep a track of your spending. Therefore, you would realize exactly how you spend and what you buy unknowingly. Observe your record for 1-2 month so that you can figure it out how to make an adjustment.

2. Have a second thought about what to buy
What you want to buy is completely different from what you need to buy. What you have to buy like daily food comes at the first place. What you want to buy like soft drinks is not necessary but it may make you look fashionable. The hottest cell phone or the fanciest car would make you more supreme than others. It is all your desire that makes you make the wrong decision and costs you a fortune. Sometimes, it cost you two to three-month salary like luxury clothes and shoes which you cannot afford. Always step behind to see if it is necessary to buy and if you pay all the necessary money first like rent, food, car fuel, and the utility bill.

3. Reward yourself occasionally
After working so hard for a month, you would be happy to get your paycheck. It is very natural that you would like to buy something to reward yourself. Usually, they are not ordinary goods that you see every day. There is a rule that you must tell yourself - If there is more money left, you can buy something to reward yourself occasionally. If you subtract your expenses from your paycheck, you still have money left over. Every month or ever two to three month, you can buy something fancy like LV or Gucci or you have a trip overseas. However, it does not mean that you can go shopping without limit. You have to know how much you have and how much you can spend. One rule is that it would not affect your daily payment and life.

4. Make the best use of your money
Try to have a habit of searching for the product that you are interested in and see if anyone sells at the lower price. You do not have too much income to spend it all. That is why you have to use your money smartly and buy most luxury goods during important holidays like Black Friday & Cyber Monday, Christmas, Thanksgiving d day. Therefore, you have a bigger discount and save a lot. Searching for discounts, collecting coupons, and buying the second-hand electrical appliance, clothes, and furniture can help you save a lot.

5. Make a payment plan for expensive goods
Whenever you have plans for purchasing expensive products or traveling abroad or decorating your house, the first idea that comes to your mind should be where your money comes from or if you save enough money to pay for it. Never try to think that you can apply for a loan with a high interest rate or pay with credit card with revolving interest. You need to fully control when and how much you would spend and how you would pay for it. Is it necessary to buy it now? Do you really need to buy such expensive goods? Can your saving or income support your expenses? Try to answer all these questions and see what happens. It is a better idea to make a payment plan so that you would not pay too much interest and make your credit record bad.

6. Limit your credit card limit
Credit cards are good and convenient tools to pay. However, they are too good to forget that you have to pay for it in the end and you would lose the sense of money. When you forget to bring cash or have little cash at the end of the month, it is very easy to pay with a credit card. If you have more than one credit card and your total credit card limit exceeds your income very easily. If you run out of your credit card limit, you cannot pay it fully and have to pay the revolving interest naturally. The interest rate is very high and makes your financial situation worse. Therefore, you have better not apply for more than two to three credit cards and limit your credit card limit into the reasonable amount. Sometimes you may go shopping widely without noticing it and your credit card transaction would be rejected by the bank. It is also a good thing to remind you that your spending is too much to afford it.

7. Start to save money today
Everyone loves shopping and does not want to pay. However, it is not possible to happen and everyone has to learn to be responsible for himself. When you have your first job and paycheck, you are excited about it and would need to buy clothes and a suitcase to be prepared for it. You have seldom heard about saving money. After working for a period of time, you earn more money and buy more and more like good clothes and have parties. Someday you wake up in the morning, you find out that you do not have much left in the bank account. You would wonder why you spend it all without saving. Nobody wants that to happen. Let’s get started to divide your income into several parts such as monthly payment, allowance, investing, and saving. You have to save some for a rainy day or your retirement or your kids. You would never know when you would need it. You can even set it up to transfer your paycheck automatically to different accounts. It is good that everything is in order and paid on time.

8. Invest yourself to increase your income in the future
When you have a stable job and paycheck, it is easy to live a comfortable zone without motivation to invest yourself like reading related books or studying related courses in your industry. It is pretty easy to be left behind in your company. In the long run, you know less and turn out to be afraid to change. If your boss wants to give a raise, you would get less than others who have better performance evaluation. If your company has a re-engineering plan, you would be included in the list possibly. If you want to apply for a job which has a higher salary, it is not easy to get it. Nobody wants that to happen. You would have to move forward, or you'll fall behind.

As you sow, so shall you reap.
Truthfully, making good use of your income and balancing your income, expenses, and debt is a lot to learn. Purchase and Gratification Delay is not easy to be done. At first, you would give yourself a lot of excuses not to keep a track of your spending. The more you practice, the more you get used to it. Just remember it is all for a better future.

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