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- 80/20 Rule of Managing Money💰
80/20 Rule of Managing Money💰
What if 80% of your financial success could come from just 20% of your actions? Discover how the 80/20 Rule can help you focus on the few changes that make the biggest impact in transforming your finances today!
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Greetings, and welcome to the twenty-sixth edition of Wallet Wellness in 2024 - your midweek source of practical financial tips to elevate your money management skills!
We hope you had a chance to check out the last edition where we discussed ‘black tax’ and how we can better support our families financially. In today’s edition, we explore the 80/20 rule of managing money, what it is and how it impacts our financial well-being.
As always, be sure to check out the Concept Corner below for a deep dive into the money concept of the week.
Let’s dive in!
MONEY254 TIP OF THE WEEK
80/20 Rule of Managing Money💰💼
Also known as the Pareto Principle, the 80/20 Rule encourages you to prioritise and concentrate on doing the “little” things that will make the biggest difference in achieving your financial goals.
It states that 80% of consequences come from 20% of the causes. And when applied to your personal finances, the 80/20 Rule can be restated as 80% of your financial results come from 20% of your actions.
For instance, if you review your spending habits, you might find that 20% of your expenses account for 80% of your financial stress, such as high regular eating-out costs, impulse buying, the unused gym membership, or spending too much on rent among others.
By identifying and addressing these key areas, you can make substantial progress in getting your finances in check.
Today, let's explore the areas where small changes can lead to significant financial improvements and set you on a path to achieving your goals.
1. Focus on the Important Stuff 🎯
Set your mind on activities that have the highest impact on your financial well-being. This includes performing well at your job and improving your skills, exploring side hustles, saving, and investing.
● Why it Matters: Excelling at your job can lead to promotions and raises, while a side hustle can provide additional income. Consistent saving and smart investments can grow your wealth over time.
● What to Do: Consider Additional Income Streams: Think about side gigs or investments that can supplement your main income without overwhelming you. Read More.
2. A Budget Is A Must-Have 📝
Creating and sticking to a budget helps you manage your money effectively, ensuring that your expenditure aligns with your financial goals.
● Why it Matters: A budget provides a clear picture of your financial situation, helping you avoid overspending and ensuring that you allocate money for essential expenses and savings. It also helps you identify areas where you can cut costs.
● What to Do: Spending Priorities: Allocate your budget to needs (e.g., rent, utilities, groceries) after first saving a pre-determined amount, then consider wants (e.g., entertainment, dining out). Live within your means.
3. Automate Your Payments and Savings 🔄 🤖
Consider setting up automatic transfers for your savings and bill payments to ensure consistency and avoid missed payments
● Why it Matters: Automation helps you save regularly without having to think about it and ensures that your bills are paid on time, avoiding late fees and penalties. It also reduces the risk of missing payments.
● What to Do: Monitor Your Accounts: Regularly check your accounts to ensure you have sufficient funds in your account and that automatic payments and transfers are being processed correctly. Read More.
4. Cut Down Unimportant Spending ✂️
What are some of the things that you spend on that are not exactly contributing positively to your financial growth? Identify and reduce the expenses for they significantly affect your savings goals or could even plunge you into unplanned debts.
● Why it Matters: Reducing unnecessary expenses frees up more money for savings, investments, and other important financial goals. It helps you avoid financial stress caused by overspending on non-essential items.
● What to Do: Track Your Spending: Consider keeping a daily or weekly log of your expenses to identify areas where you can cut back on expenditures. Learn More.
5. Check Your Progress Monthly 📅
At the end of every month, review the progress to your financial goals. Check how much you saved and spent and if you need to make adjustments to your budget. See if you are on track with your goals.
● Why It Matters: Monthly reviews help you stay accountable and make necessary adjustments to your financial plan. It allows you to track your progress, identify any issues early, and ensure you are moving towards achieving your financial goals. Read More.
● Set Goals: Set short-term financial goals for the upcoming month and track your progress toward achieving them. Ensure to compare your actual spending with your budget and adjust as needed. Read More.
Now that you know the key areas where if most effort is channelled impacts your financial goals positively and propels them forward, it is time to run a check. See where you need to adjust and readjust.
Where have you put your biggest efforts?
Remember, it is the “little things” that matter in the long run eventually leading us to the achievement of our financial goals and improvement of our financial situation.
CONCEPT CORNER
Value for Money
Value for money is about ensuring the quality or benefits of a purchase justify its cost. It’s about spending wisely to ensure your investment provides meaningful returns and satisfaction, allowing you to make informed and confident choices. Learn More.
Money Psychology
Does Having No Money Mean Zero Self-Esteem?
When it comes to money, does having more or less determine one’s self-esteem or self-worth? One study shows that people are more vulnerable to negative psychological consequences when they tie their self-worth to the pursuit of financial success. Read On.
MONEY254 #MONEYTOK
Benefits of Automating Your Expenses
Automating your expenses such as in paying your bills and other financial obligations is one of the most underrated money hacks. In today’s MoneyTok, we discuss some of the key advantages of automating your expenses. Watch The Video and read more about Automating Your Finances in this article.
@money254hq 𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐨𝐟 𝐀𝐮𝐭𝐨𝐦𝐚𝐭𝐢𝐧𝐠 𝐲𝐨𝐮𝐫 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬 #money254 #budgetingtips #budgeting101 #fyp #fypp #money
That's it for the twenty-sixth Wallet Wellness edition of 2024! We hope these financial tips have added some energy to your hustle. Stay tuned for more practical insights in our next edition of "Wallet Wellness" next week and watch out for Money Weekly on your inbox this Friday.
Also, don’t forget to download the Money254 App on the Google Play Store, and remember that we can help you compare over 300 loans, savings accounts, current accounts, and more if you’re thinking about your next product.
Cheers to your wallet's well-being!
Money254 editorial team.
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