Want to get your finances under control? Whether you’ve just moved abroad, are studying or simply want to manage your money more consciously, it is important that your money works for you and not the other way around. Here are five simple tips on how to use your income effectively and make your dreams come true.
1. The 80–20 rule: the easiest way to save
You don’t have to be a financial expert to save money. One of the simplest methods is the 80–20 rule. Spend 80% of your income on your expenses and set aside the remaining 20%. If you do this consistently, you will automatically build up a small fortune.
2. Keep your money safe: an emergency account
The 20% you save should be placed on a separate account that you don’t have access to in everyday life. This is your emergency account and your safety net in case something unexpected happens. This means that you always have financial protection in case of an emergency.
3. Be wise with your cash
It can be tempting to carry a lot of cash with you, but that can also be risky. Don’t take all your money with you when you’re on the road. It’s safer to carry only as much as you really need. If you lose it or it’s stolen, you won’t lose everything.
4. Set clear financial goals
Saving is easier if you have a goal in mind. Ask yourself: What do I want to save for? Whether it’s a new smartphone, a trip or a major purchase, set specific goals and determine how much you want to set aside for it each month. This can be very motivating.
5. Think like an entrepreneur
Treat your money like your own small business. Ask yourself critical questions before every purchase: “Do I really need that?”, “Is there a cheaper alternative?” If you spend your money wisely, you will quickly see where you can save without having to sacrifice anything important.
At the end of the day, managing your money wisely is your personal responsibility. Find the way that works best for you and use your money to shape the future that you want.
