Are you living above your means? If you spend excessively but aren’t putting anything towards your savings or paying off debt, you could be. What’s more, your lifestyle could be holding you back from reaching important financial goals. Here’s how to manage your finances to ensure you’re financially free.

Do an audit of all your expenses

It’s easy to miss some of your expenses in the midst of all the debit orders. Review your bank statements monthly and highlight all your expenses and debit orders. Add up the amounts and write down the total. Subtract this amount monthly before doing your budget, so you’ll have a more accurate idea of the money you have available to save and to spend.

Forget your credit card

Avoid using credit unless you really need to (e.g. in an emergency or when making an important big purchase). Rather save up for purchases if possible, and if you’re really tempted to buy something, wait 24 hours to weigh up how much you really want the item.

Map out your financial goals

The best way to keep yourself on track is to have a constant reminder of your financial goals. Write them down in a notebook or create a collage or mood board that represents them. Create a plan for each goal too. This could mean savings milestones for each month and so on.

Use the 50/30/20 budget

This budgeting ratio is the simplest way to manage your money. Allocate 50% of your income to your needs (e.g. expenses), 30% to your wants and 20% to savings. It will take some time for you to get to this ratio, depending on your income and needs. However, you should try to follow this budget plan as closely as possible.

Give up immediate satisfaction for long-term goals

A takeaway coffee every morning or unplanned shopping trips now and then may not seem costly, but they add up. These seemingly small purchases could even be holding you back from reaching your goals too!

Review your bank statements to find unbudgeted expenses that you make often. Assess what kind of purchases they are and look at what lifestyle tweaks you can make to save more. This could mean:

• packing lunch and making coffee at home (or at the office)
• limiting the number of your outings per month
• budgeting ahead of time for expenses like clothing
• waiting 24 hours before making a purchase

Once you’ve managed to change some of your spending habits, you’ll have more money to work with.

Find more finance tips in these blog articles:

• 7 tips for eating out on a budget
• Saving: Have You Been Doing It Wrong?