In this modern day and age, and especially so in this new economy shifted dramatically by the pandemic, it seems so disturbingly easy to just suddenly end up in the red in regards to money; with all these online purchases, delivery fees, payments, etc., it can seem highly confusing as to where exactly all that money is going to, and why. Well, it all comes down to the movements of said money! But there is more to that than just those movements in order to ensure that everything stays in the green.
And that’s where these tips for budgeting came in handy for me. Using these five tips, you can figure out your money and control it, preventing yourself from going into the red and staying in the green consistently instead.
We all have some kind of income to sustain ourselves, but for some of us, that’s not the only source in which money flows into the bank. Perhaps we’ve taken a loan for something, perhaps a student loan of some kind, or maybe even a loan for a car? Whatever the case, it’s of paramount importance that you figure out where the inward cashflow is, and calculate just how much is flowing in.
And from there, we get to the second “Figure” in the Five Figure Plan, and that is the exact opposite of the first. After figuring out where the inward flow comes from, and how much, you then have to figure out how much is coming out of your pockets, the outward cash flow.
This may be a bevy of things, maybe there’s bad credit to fix, or a credit loan you’re overdue on, or maybe there’s just fees for your recent delivery. Either way, both the calculation of inward and outward cash flows are important, because its from this information that you figure out just what you’re spending your money on.
And after you figure out what you’re spending your cash on by contrasting your income and spending, you need to filter some of those expenses, and most important of those expenses are those that you actually need. Put those expenses into one category, then move on to the forth “Figure” in the Five Figure Plan.
And that is none other than figuring out those expenses that you don’t really need that much. It could be delivered food, it could be items bought on the various online markets in the internet, or even just the unnecessary over-usage of the air conditioner.
Whatever the case, you need to figure out which ones to part with, or in certain, extreme cases, figure out which ones you’ll need to part with in order to stay in the green.
And from that point on, there’s nothing left to do but the final “Figure” in the plan, and that’s none other than just figuring out what the end result of all these calculations is. If it results in you being in the green, then you’ve done it right. If it results in you still being in the red, then consider parting with more unnecessary expenses.
These are my five tips in the Five Figure Plan, and trust me, you’ll thank yourself for the discipline you’ll be instilling in yourself with these tips, and you’re even going to wonder where all that extra money’s coming from.