How to manage your personal finance

For many, managing your personal finances can be confusing. This can cause the money to disappear between your hands, without really knowing what the money is being spent on. It is therefore a good idea to have an overview of what your money is being spent on, as well as how much money you have left.

How to manage your personal finances

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Planning your personal finances is a task that you can take care of yourself. Here are 5 tips on how to manage your personal finances.

1. Get an overview of your income

For starters, it might be a good idea to get an overview of what your monthly income is. You should base your income after tax so that you know exactly what amount you have available each month. You can find help on calculating your income after tax on the SKAT website.

2. Get an overview of fixed expenses

The next step is to get an overview of your fixed expenses. This includes all the expenses you have each month or expenses quarterly, semi-annually or every year. This can be rent, insurance, mobile, television, public transport etc. All your expenses are calculated, so you know exactly what you have to spend each month. The expenses, for example, are semi-annual, you divide by 6 months. Here’s how you know what to put aside each month for that expense so you don’t stand and spend money for the rest of the month. This is incredibly important before you make an online loan.

3. Make a budget

Once you have created an overview of fixed income and expenses, it is possible to calculate what amount of money you have left each month. Therefore, create a budget in a spreadsheet where you deposit your income and fixed expenses. Also, make sure you have the food budget included. When you deduct your fixed expenses from your income, you get an overview of what amount of money you have left per month.

You can spend this money with good conscience on exactly what you want.

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4. Save up

There can be a big difference in how much you want and have the opportunity to save up. However, it is always a good idea to have a savings. Although you may set aside only a small amount each month, it can quickly add up to a larger amount. In the case of unforeseen expenses, you will have money saved for these expenses. If you have a surplus in your payroll account at the end of the month, you should transfer this money to your savings account. This money can also go for a trip or something later.

5. Create multiple accounts

Once you have created a budget, it may be a good idea to create multiple accounts in your online bank.

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In addition to your payroll account where your income is deposited, you should create a budget account where your fixed expenses are deducted. A food account that can help you see what amount of food you have available during the month. Next, you can create a savings account where you transfer a fixed amount to each month. It is a good idea to have these accounts separately so that you do not use them for the wrong purpose. It provides a better and more clear overview of your finances. You can set your online bank to automatically transfer from your payroll account to these accounts so you don’t forget.