Personal Finance Segmentation How It’s Supposed To Be Done
The key to personal financial success starts and ends with the manner in which you handle your personal finances, particularly with regards to how you allocate the funds you have available to the various areas on which you need to spend. Of course “wants” and desires come into play as well, we are only humans after all, so you should never even try to lie to yourself and resolve to only spend money on those things you need to spend on and not spend anything at all on any “wants.”
The process of allocating your available funds to be spent in each area of your life is referred to as personal finance segmentation and often just taking a much more calculated and official step to your personal finance segmentation enhances your personal finances by highlighting a number of different ways through which you might be practicing wasteful expenditure. A lot of money gets lost in the logistical side of proceedings and so it’s important to start with this logistical side of handling your personal finances and work your way up from there.
Work Towards a Surplus
I want to start out by saying you should “pay yourself first” through savings, but putting away a set amount each month or week can prove to be really hard if not impossible when you don’t have any money to put away. Most people who have somehow found that they’ve committed themselves to taking out credit already have a tag for each pound that’s going to come in as part of their paycheque, before the money even hits their bank account. All the bill collectors set off their debit orders and you often find yourself wondering just how you’re going to make it to the next payday.
So what you first have to do is try by all means to work your way towards a set amount you can put aside each month without having to dig into it. This can be done by perhaps consolidating your debt so that you have lower re-payments to make, lower interest rates (although this will prolong the re-payment periods) and perhaps also benefitting from only having to deal with a few financial services charges as a result of consolidation. The money that frees up then makes for a new surplus which you can then either save (you have to save some of it at least so that you can take advantage of the magic and power of compounded interest) or invest in various ways.
Don’t just see your surplus as a green light to raise your living standard. Continue living below your means and explore different types of investments, from the higher risk / higher reward ones like playing the Columbus online slot game (which is a lot of fun too), through medium risk / medium reward investments like token investments in growing businesses, right up to the lower risk / lower rewards investments which are much safer but grow at a steady rate. Often this (low risk / low reward investments) is something which is taken care of by the likes of your contribution to your pension fund.