Five Tips for Managing Finances at the End of the Month

Five Tips for Managing Finances at the End of the Month | Employees or freelancers have a monthly cycle that starts from the day they receive their salary until they run out of money and get paid again. The way each individual manages their finances varies depending on their lifestyle. Ironically, even when people understand this cycle, there is still a financial low point known as "the end of the month."

5 Tips for Managing Finances at the End of the Month

Managing finances at the end of the month can be tricky. You may have good intentions to save, but there are many temptations. "Just five days have passed, and my account balance is down to a couple of thousand dollars. There are still 25 days of suffering ahead."

1. Avoiding Debt
Have you ever experienced the same fate? Typically, most people who run out of money too quickly often do so due to debt. Therefore, avoiding debt for consumptive purposes is something that should be done as much as possible. By doing this, the end-of-month financial struggles become easier to overcome. You should also accurately calculate your monthly living expenses. For example, try to ensure that 50% of your total monthly income covers your monthly expenses. It's only reasonable that the last five days of the month are tough if your monthly funds are not allocated correctly.

2. Monthly Planning
The most vital aspect of managing finances is budgeting. If you plan it effectively, you can be sure that you'll be financially secure. Conversely, if you feel that your salary is too low and sometimes forget that there are 30 days in a month, I suggest trying the 20:10 technique.
To optimize your spending, consider splitting your shopping money into two accounts. Put the first part into Account A for the first 20 days of the month. The second part, for the remaining 10 days, can be deposited into Account B. Keep the book for Account B along with the ATM and PIN at home. Don't carry them around, and only use them starting from the 21st of the month.

3. Setting Aside Money for an Emergency Fund and Reserves
Emergency funds and reserves, even if small in amount, should be kept in a bank account or another easily accessible investment instrument. For emergency funds and reserve investments, it's recommended to look for the most liquid products. This means funds that can be easily accessed when you need them, such as gold, stocks, and others. Can stocks be part of your emergency fund? Yes, but the most ideal instrument is cash in your account because selling stocks may take more than a day.

4. Dividing Daily Expenses for the Next 30 Days
There's a technique that may seem complex but is actually easy to implement. This technique is similar to the daily allowance we received when we were in school. With varying amounts, you can also implement this technique. For instance, with a monthly spending allocation of around $200, divide it by 30 days. The result is the maximum amount you should spend in a day, and if possible, save some for your emergency fund or reserves.

5. Spending Bonuses or Overtime Pay
Some people have different approaches to managing their finances. However, one fatal mistake is spending bonuses or additional income from outside their main job immediately. My suggestion is to deposit this extra income into your main savings account, and then decide whether to allocate it to your emergency fund or invest it elsewhere.

Hopefully, with these tips, you can transform the end of the month into something less daunting and achieve the results you hope for.