Balancing income and expenses
Recently I have been thinking a lot about this topic. I personally think that growing our financial status is based on how we handle our income and expenses and especially it is based on how we balance it out. There is a high chance that we might end up spending a lot more than what we earn and there is also a possibility that we end up becoming stingy and not spending enough.
One wise person told me that we should keep a balance between income and expenses and it is not a wise way to live-saving up all the money than spending them at the right time to enjoy life. Recently I was on a vacation and I wanted to give this a thought. I already thought that I was spending too much and I was wondering if I was earning enough or not.
Financial discipline
Financial discipline comes when we are good at spending the money we earn with the right frequency. We have to have discipline where we shouldn't be spending more than what we are earning. If we are spending more, we have to do an analysis and first understand what makes it go out of the line and cut down our expenses. Sometimes the expenses can be an unexpected one but we still have to keep looking for ways to cut down the other expenses.
There are two ways in which we can resolve this issue. The first is either by cutting down the expenses and the second one is by increasing our source of income. We have to be in search of different opportunities through which we can increase our financial income. If we have enough sources of income, then we don't have to worry too much about our expenses but at the same time, we should definitely have good financial discipline.
Having proper emergency reserves
Sometimes it can be hard to balance the income and expenses. I personally have had situations where even though we plan it very well, there can be instances where it would go out of hand. I personally do something about this. I have been maintaining an emergency fund reserve for myself and my family. When the expenses go out of hand, I don't feel bad because the emergency reserve would help me out.
The biggest discipline someone needs here is that the funding should always be like savings and we shouldn't be touching those funds at all. There won't be any need to touch those funds and even if there is a need, we have to make sure there are other ways available to manage the situation. Mostly these emergency funds that we are maintaining is only for viewing purpose and to make us feel secure. It should never be touched. Even in the worst cases if it is used, it should only be used rarely and the funds should be refilled immediately at the next opportunity.
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