#1 Determine your monthly incomings and outgoings
– Managing your money effectively comes from an accurate understanding of your regular income per month, after taxes.
If you don’t receive a concrete number throughout the year, this can sometimes make it difficult to understand how much you have available – with some months earnings being marginally more or less than others.
As a freelancer, this can be particularly problematic for example as you will need to estimate your earnings based on previous paycheques at this time of year or previous experience of busy periods within your sector.

If you’re earning a salary and receive a fixed pay per month, it will be much simpler for you to figure out your consistent earnings.
Once you have this number in mind, apply any extra income you regularly earn, too.
For example, maybe you run a social media page that earns money on the side or write a blog that produces occasional earnings. Whatever it is that you do on the side, make sure to apply this to your monthly, take-home pay!

#2 Track your spending habits
– Once you have an understanding of your average paycheque, the next step is to realise your frequent spending habits. There will be payments you’re able to keep track of with ease and those that frequently slip under the radar.
Tracking expenditure gets put off by most people because reading into spending habits can all too often become overwhelming. The process needn’t be complicated though and simply requires you to study your bank statements from time to time.

Whenever a bill appears in your statement, jot it down and note the amount being withdrawn into either a spread sheet or diary. In this process, you’ll more than likely find an old subscription or two that you’ve forgotten to cancel, which will save you a bit of cash right away.
Totalling your expenses and tracking your spending helps to categorise and understand exactly how much of your money is going where. By categorising your spending across bills, travel, food costs and entertainment – you’ll be able to identify where you’re spending too much money and what you can look to change.

#3 Mark out your disposable income priorities
– Before budgeting, you’ll need to determine your priorities. After categorising your spending habits, you’ll develop more of an understanding into where your money is heading.
From here, you can decide which of these categories are priorities and use them to help you decide what to do with your disposable income.
Once you’ve got your essentials out of the way, you’ll need to decide on a focus that your remaining money will work towards and with this, your habits will need to align in order to save effectively.

Your focus will be whatever is most important to you and this could range from less fun things like paying off credit card instalments to more fun things like a holiday or a wedding on the horizon.
Picking your saving priorities is crucial in making sure you manage your money accordingly and ultimately sets you a goal that motivates you to control your money properly.

#4 Anticipate emergencies
– Regardless of what you have identified your priorities as, you’ll also need to make sure that over time, you’re developing some easily accessible funds that will really help out in times of need.
You can manage your money at a constant rate but unfortunately, life happens and with it, the unexpected will almost inevitably come along and slightly dent your progress.
It is for this exact reason that keeping some money back in case of emergency is crucial in the management of your money. This won’t quite happen overnight either meaning it’s likely you’ll have to build up this amount up over a few months.

From an unexpected car break-down to a medical emergency or your other half losing their job, whatever the circumstances – money is usually needed to fix an emergency issue to some degree.
Emergencies cause enough stress as it is, let alone if you find yourself with insufficient funds to cover yourself in any unlikely event. Managing your money appropriately to ensure you have something spare for any situation will make you feel more secure and help to take an element of worry away from your already busy plate.

#5 Make a plan and stick to it
– Finally, with all of these steps in mind – you can work towards creating a tangible plan to manage your money.
Once you have an understanding of your regular earnings as well as how much you regularly spend and what your saving priorities are – you can begin to apply this to a plan that you can stick to.
If you have a priority in mind like a holiday for example, you can start working towards this by simply cutting out spending habits that you’ve identified as unnecessary.

Whatever priority you’ve chosen to aim towards, you’ll need to cut down expenses elsewhere to help contribute. Whether it’s changing where you shop to a cheaper alternative, choosing a different form of transportation, creating your own lunch instead of eating out so often – whatever the perpetrator is, cut it down and stick to your new changes for a month.
After a month you’ll begin to build a picture of whether this change has helped you save your money more effectively or not and you can then further decide whether you stick to it or revaluate your budgeting once more.

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