How to concretely manage your finances is the first pragmatic step that will help you gain your financial independence. We are sharing with you 7 steps to be aware of your situation and get you back on track on the money front. ⏰ 5 min. read
If you are reading this article, you are taking a closer look at your finances and you probably need to better manage them. Despite all the stereotypes and unconscious biases concerning money that we meet as women, you are able to manage your money with great success.
And, after having asked yourself what financial freedom means to you, defined your big dreams and how much money you need to make those dreams come true, it is time to make a first pragmatic move.
Follow these 7 simple steps and start controlling efficiently your finances. No need to get a master in finances, only focus and determination!
1. Start today and dedicate 10 minutes per day to it
“I want to do this. I can do this. I do this!”
It is completely possible. Just think about your “why”. Why do you want to manage your finances? What benefits are you gaining? What disadvantages or bad consequences are you going to lower or remove? It is all about perspective. It is for you the opportunity to live a better life in good conditions.
As I experienced it myself, it is never too late to start to manage your finances and it can even become joyful and playful. And most important, it brings you peace. If you commit to focus and take action, being worried about paying the bills, the mortgage, and the debts can definitely become a thing of the past.
Obviously, it is challenging too. And the reasons why are endless: you are not used to follow a budget, you are afraid to face your current financial situation, you don’t have time, you are taking care of the domestic contingency alone, you prefer to ignore the disaster instead of facing the problem, you are a single mother with no other financial support…
One certitude though: if you want to improve your financial situation, you need to start handle it right now. That’s why getting a sense of your monthly cash flow — what’s coming in and what’s going out, is a good start.
2. List your incomes
Knowing how much money is entering into your bank account every month is a first step to picture your current situation. By incomes, we mean: salary or fees if you are a freelancer, rentals, pensions, dividends…
List all the numbers down, make the addition, and keep this amount in mind. The first part is already done. And don’t think this number can not grow bigger. On the contrary, @ Akali Academy, we encourage you to earn the amount of money you want and deserve. And to achieve this goal, you can discover in our posts some tips to help you negotiate your salary or fees.
3. Keep track of your expenses
In a second phase, it is essential to be aware of your monthly expenses and your purchase habits. This step gives you powerful insights and helps you to successfully manage your journey towards financial independence. This is the only way to know how much you spend and where you spend your money.
In order to carry out this monthly inventory, you can use spreadsheets — you can find free templates online like Office Templates, Google Drive or Mint, or you can use an app (Mint, You need a budget, Home budget are some examples among the most popular). Some persons also create specific financial areas in their bullet journals. Writing them down in a notebook is fine as well YET more time consuming. Pick one solution and start your daily inventory.
What expenses are you tracking? All of them. Check out your bank account history and keep the receipts of all your purchases.
List all your spendings in two categories:
- Fixed expenses: mortgage or rent, utilities, insurance and debt payments…
- Variable expenses: organize them in sub-categories, such as food, clothing and travel…
- Unforeseen expenses: for example, medical treatment, new washing machine…
4. Analyze your current situation
Once you have a track record of two of three months expenses, you can start analyzing them. Fixed expenses are less likely to change from month to month. At the contrary, your variable expenses will give you more room for change. That’s why keeping your monthly track is so important, you uncover new expenses and therefore are able to make the proper adjustments. You can also discover that you are not doing that bad after all.
Also, this may just show that you are actually spending €80 per month in coffee. Or maybe you will realize you are paying for a recurring subscription services that you barely use and that you can cancel.
5. Improve your actual expenses
Leveraging your variable expenses is the first action you can take and this will have an immediate financial impact. Start by canceling the services you don’t use or don’t need anymore. Identify the expenses you can remove and remove them. You should quickly see a positive impact on your budget.
Even concerning your fixed expenses, you have a slight room for improvement. You can always negotiate your interest rates, and adjust your major recurring monthly expenses, like car and utilities by negotiating your current contracts or change your provider.
Furthermore, here a few tips and tricks I use myself to control my extra expenses and become aware of my spending. As a direct consequence, I can better manage my budget because I spend less:
- At the beginning of the week, get in cash the amount of money necessary to cover your weekly personal expenses
- Leave your credit card at home
- Before you buy something, ask yourself the following questions: do I need this? Why do I need this?
- Never buy clothes or objects right away. Go home and if the next day you are still thinking about it, ask yourself the previous questions again. If the lights are green, go for it
- Be aware of your emotions when you are about to buy an item: you certainly have heard about this saying “never go to a grocery shop when you are starving.” Same applies to shopping; never buy something to only get a quick shot of happiness or to make your sadness disappear. The feeling only sticks for a short moment but your money is already out of your pocket
- That brings me to the next advice: if you buy clothes, never take immediately the price tags off and do not throw the receipt away. If a week later, you never wore them, bring them back to the store
- Buy consciously and keep your values in mind when you are spending your money.
As you will experience it be applying those tips, you are going to gain a whole new perspective and brand new habits. And see a positive impact on your financial situation.
6. Define a monthly objective
Every month, focus on one specific objective and dedicate time and energy to reach it. This is the best way to continue the good job and stay motivated. You need indeed some monthly marker to make sure you are on the right path. Here are some examples of objectives to help you define yours: reduce grocery expenses, pay the bills on time, no bank overdraft…
Also, stay accountable for your decisions and actions. One way to do that is to share your objectives and results with someone you trust. Why not organizing follow ups with your partner or a friend. When we share our situation, concerns and successes we create strong links with others, feel indeed more responsible and tend to be more dedicated to reach our objectives.
7. Make a balance and the changes that are needed
The last step to help you improve the financial situation concerns the necessity to make a balance. Each week or each month, take a few minutes to acknowledge your progress and your setbacks. Once again, no judgement here, just look at the facts. Write them down to stay as objective as possible and keep a wider perspective:
- What went well? What makes you proud? Take a few minutes to be grateful and to congratulate yourself.
- What did not have the positive outcome you were expecting? What went wrong? Once again write down the facts.
- What can you do differently to get a positive outcome? What can you change to get more positive impact on your finances?
Asking yourself and answering those questions is going to help you stay focused and motivated. Also, this balance I a powerful tool to keep you committed to your objective by creating the necessary action plans and making the required changes.
Last thing, Rome was not built in a day. Keep doing every day your track of expenses and your weekly or balances. Stay calm and patient. After a few months, you will see consequent changes, you will manage more concretely your finances, and improve your financial situation.
As an additional note, to help you to go deeper and further, we created a training program especially dedicated to your needs as a woman in order to help you achieve your financial goals and gain your sustainable financial independence. Follow us on Instagram, Facebook and LinkedIn to discover more and get the latest information concerning financial freedom and how to free your mind and heart from financial worries.
We hope that you find some inspiration reading this article and that our tips help you to better manage your finances on a daily basis.
For more information on how to live the life you want, sign up for our newsletter @ www.akali-academy.com and get your self-confidence workbook for free!
Have a nice weekend,