Managing one’s income; for most people is likened to the Biblical passage of, “The spirit is willing but the flesh is weak. It is not the aim of a breadwinner to run into debt, but eventually he will find himself in it. Once in debt, there is always the tendency to remain in it because you spend more to get out of debt.
So how can you effectively manage your income; here are six ways to help you.
- Spend less than you make: Don’t spend more than your income! Know your NEEDS and your WANTS. In simple terms, your needs are what is considered necessary such as food, electricity, clothing, transportation etc. Your wants are what you can do without ,such as, 4k TV, expensive clothing, videogame console, summer vacation etc.. This is an exercise of self-control.
- Pay yourself first: set a savings goal. Your savings can be used to build an emergency fund, 10% of your savings is a good way to start.
- Get out debt: Stay out of debt! Other than mortgage or other manageable business loans, stay out of debt. You are either paying interest when you are in debt, or earning interest, when you are out of debt.
- Get health insurance coverage: take advantage of the government’s health insurance packages for you and your family. Don’t say you are healthily, and you don’t need health insurance, in case of an emergency, it could save you lot of huge spending and running into unplanned debt.
- Don’t be greedy: Avoid get rich quick schemes. While what they tell you is true, it also comes with very high risk and equal possibility of losing all your investment.
- Use debt wisely: debt should finance true emergencies that you cannot pay out of your savings, e.g. a new roof, car, house. Don’t use debt to finance short term loans such as plasma Tv, new clothes, vacation etc., debt used this way is the enemy that can run you bankrupt.
Remember, how much you make, matters some, but how much you keep matters most.