piggybank for personal finance management

Personal Finance Management for Working Class Women

2022-10-26T06:00:06+00:00

By Bede

Most times, when earnings increase for working-class women, increased spending may occur, especially in wanting to upgrade one’s wardrobe, and self-care. This is why it is important to take personal finance management seriously. Finance management is the way you take care of your income, how you spend, save, invest, and the overall state of your financial health. In order to ensure that you can derive value from earnings, taking charge of your finances becomes very important. Oftentimes, people want to spend their earnings on things that are important to them, invest in their career development, save, and also invest their earnings towards a brighter future, but they end up tilting towards one part rather than the other. For example, either spending more and saving less, or saving more and restraining yourself, thereby not enjoying your proceeds or living fully. Living a good life (whatever it means to you) is not limited to extremely wealthy people. This article will provide simple practical steps you can take to start your personal finance journey.

Analyze your finances

What is my net worth? How much am I spending? What should be cut out from my spending? Do I need an extra income to live the life I want? These questions highlight what your financial state looks like and help figure out what you spend on and what you can do to make it suit you.

Have a clear goal

This should be done according to your life’s mission/vision. Questions like “What is most important to me in my life?” and “What are my needs and wants?” would set a tone for your finances and help you prioritize so that you can stay on track towards a fulfilling life. You are the main character here.

Budget

This is the prioritization of needs/wants, what is important or urgent, what needs should be taken care of at the moment or the ones that can be done in the future. It exposes everything you spend on and how much you intend to spend on each to aid expense tracking at the end of the week or month.The most common rule of the budget is the 50-30-20 rule by Senator Elizabeth Warren in her book All your worth, which states that 50% should go to your needs, 30% to wants, and 20% to savings/investment. Budgeting is the key to proper finance management. Write it down!

Save

The expression ‘save for rainy days’ wasn’t coined for fun. If you have become stranded before despite being a high earner, you would have a lot to say about it.The general suggestion is that you should try to have savings enough to cater for you for about 6 months without your earnings.Saving is a form of personal security for times when things may not be smooth. And as women tend to spend a lot on various items, saving towards it ensures that other aspects of life do not suffer.There are various forms of savings, and one of the most important is emergency savings. They are funds that can be available to you on days when life hits, such as situations like illness, or any other unforeseen circumstances.

Spend

There is a quote from the book Richest man in Babylon by George Clason that “10% of your earnings is yours to spend.”

It is important to recognize that there is no virtue in straining yourself to work hard without having some money for yourself. Living a good life is not conditional.While frugality is encouraged, it is important for you to indulge in things that make you happy. Set aside some coins for your clothing, jewellery, travel, and anything that makes you tick.

Invest

This cannot be overemphasized. It is a crucial part of increasing money and saving for a better future. Investing in the right channel will help ensure that your future is secure and there is something to fall back on when the time comes to retire.There are lots of investment options from stocks and mutual funds to bonds and ETFs that women can engage in long term.

While you’re on your financial journey, it is important to imbibe certain habits to help you stay ahead, manage your funds better and be consistent.

These habits include:

Clarity on your goals

Knowing what you want is very important to guide you in making certain financial management decisions. This also helps you not feel bad when you spend on yourself because you know for sure what your aims are.

Revise and revisit

Constant checks for improvements on your finance management journey for where you need to do better and also when your goals shift.

Technical know-how

When investing, you have to make sure you know what you are investing in and understand it properly to avoid problems or fraudulent investments. Seeking the help of a professional can be helpful at this point.

Perseverance

Play the long-term game. Saving and investing are enjoyed when they are long-term.

Parting words

Personal finance management is indispensable if you want to thrive as a professional in any field. Although it can be quite a task, the process is worth it in the long haul. Constant learning and improvements will also aid in achieving peak success in this crucial area of your life. Ajuwon Rodiat is a Human Capital Development Enthusiast.