Introduction: Living abroad (also just living) can bring financial challenges. You might find yourself stressed about money without knowing exactly what to do. Many people want to live a life free of financial stress and future money concerns. One effective solution is to manage household finances better.
- The core reason why we feel anxiety about money.
- Household accounting retrieves the control over our money.
- Setting a clear financial goal
- Summary
The core reason why we feel anxiety about money
We face common issues
- Not knowing how much they spend each month.
- Unable to answer how much is needed for monthly living expenses.
- Surprised by large credit card bills.
- Running out of money before payday.
In these situations, we totally lose control of money and we cannot feel peace in our financial state even if we earn a lot. The first step for financial and mental peace is retrieving control over it.
Household accounting retrieving
the control over our money
Purpose of Household Accounting:We have to ask ourselves the purpose of keeping track of household accounting, if not, it becomes just the numbers alignment. The purpose is different depending on person.
For example…
- Reduce life’s uncertainties.
- Plan for unexpected job loss.
- Save for dreams like buying a dream house.
- Prepare for education fees for children.
To achieve these goals, we have to grasp the following things.
- How much money is needed to live at a basic minimum level?
- How much is required to live comfortably?
- What percentage of your current income are you spending?
When we understand these things, especially basic expenses, by tracking our household accounts, we can retrieve the control for money and reduce anxiety about money.
Setting a clear financial goal
Let’s set clear, actionable goals: The point to make the goal clear is deciding “how much” and “by when” as followings.
- Save $20,000 in five years for a world tour.
- Save $5,000 in six months for starting a new life.
- Build a $1,000,000 asset by age 40 to live anywhere and do what you love.
Summary
- Loss of financial control leads to anxiety.
- Understanding “Basic minimum living costs“, “Comfortable living expenses“, and “Percentage of current income being spent” helps regain control and reduce financial anxiety.
- Define “how much” and “by when” when you set financial goals.
P.S. Keep It Simple: While the methods should be simple, they should align with your goals. I would like to share my recommended financial management strategies 🙂
