PERSONAL FINANCES

Personal finances are a person’s or family’s income, expenditure, debts and savings. Managing them wisely can help you avoid large debts and save for a rainy day or for the future. Here are some of the key rules for managing your personal finances:

• Expenditure must be less than income;

• Savings are essential for various contingencies;

• Prepare in advance for future large expenses;

• Borrow responsibly;

• It is important to plan your finances.

HOW DO I PLAN MY INCOME AND EXPENDITURE?

Do you know how much you spend per month on food, housing, transport, clothing, education or entertainment? Do you know exactly what and how much income you receive? If you do, great, but if you don’t, it’s time to think about your budget.

A personal budget is a plan of income and expenditure. Having such a plan helps you to stay in control: to know what you can and cannot afford and to avoid unnecessary spending. The key to budgeting is to be precise about your income and expenditure. Mobile apps can help you do this. Of course, budgeting can also be done in a simple notebook or on your computer – the most important thing is that it is convenient for you.

A few steps for budgeting:

• Mark your income and expenses for a certain period of time, but not less than 1 month.

• Review what you spend the most money on. Evaluate whether you could set aside some of your income for savings and which expenses you could reduce.

• Start planning your spending. Calculate how much you will need to spend each month on food, housing, transport, entertainment and try to stay within your budget.

• Include savings in your essential spending. Plan them so that you can spend at least 10% of your income on savings.

When planning and reviewing your monthly budget, don’t forget to look at student and pupil discounts, discounted subscription plans etc. You may discover opportunities where you can optimise your budget and make additional savings.i.

If you’re a student, don’t forget that there are many discounts available, not only in Lithuania, but also around the world. You can order your Lithuanian student card here and your international ISIC student card here.

WHAT COSTS ARE INCLUDED IN MY PERSONAL BUDGET?

Necessary expenses can be grouped into fixed and variable. Some expenses will be the same each month, for example:

• Housing rent and maintenance fees;

• public transport fares;

• TV, internet, gym membership, etc;

• loans;

• savings (money we want to save).

You know the size and frequency of these expenses and can easily plan for them. Other expenses may vary from month to month. For example:

• food;

• Housing maintenance (water, electricity, heating);

• fuel;

• food in cafes, restaurants;

• various purchases and services.

50 / 30 / 20 RULE

The 50/30/20 rule is universal and applies to people of all incomes.

What do these figures mean? A person should spend 50% of his/her income on essential expenses such as housing, food, transport and service charges.

30% should be spent on variable expenses – leisure, cultural events, clothing, footwear and unexpected purchases.

The remaining 20% should be for savings and investments. This includes saving for the long term and investing in yourself – courses, events, training. All of this is an investment for a possible higher income in the future.

So, if you have an income of €1,000 per month, it is recommended that you spend €500 on necessities, €300 on leisure and pleasure purchases, and the remaining €200 on saving and investing.

The important thing is to get into the habit of planning your spending and sticking to it!

WHAT IF I FAIL TO PLAN?

Many people know roughly how much they get and how much they spend, but not everyone is able to budget consistently and stick to their plan. In this case, we advise:

• set up a recurring transfer agreement, whereby the amount you want to save is transferred from your salary account to a separate account or deposit on the day you receive your income;

• If you set aside part of your income to save, subtract from the money you have the amount you need for essential expenses (loans, house payments, health care, etc.);

• divide the remaining money into as many equal parts as the number of weeks left until you have an income again (one part for each week);

• try to survive on the money allocated to you throughout the week;

• if you have money left at the end of the month, pay it back. This is your pocket money to spend whenever and wherever you want.

USEFUL PERSONAL FINANCE MANAGEMENT APPS

We suggest you take advantage of the products of the smart technology era – smart apps that allow you to try out some easy ways to save.These apps offer a wide range of options, from investing and personal budgeting to sophisticated tracking of everyday expenses.
Just choose the one that suits you best.

Smart apps developed around the world and in Lithuania help us save time, change our habits, actions and daily routines. Apps help you manage your financial affairs quickly, conveniently and safely at any time of the day. All you need is a mobile phone and with one click you can view your spending statistics, compare data and assess where and what you have overspent.

USEFUL APPS FOR PERSONAL FINANCE MANAGEMENT:

Daily Budget

One of the simplest and easiest to use apps to keep track of your daily budget. The app breaks down your monthly income by how much money you can spend each day, minus essential expenses (utilities, internet, phone, TV, fuel, etc.), and gives you recommendations on how much to set aside for savings.

Nerd Wallet

A successful budget planner helps you decide how best to spend your money while avoiding or reducing debt. “NerdWallet recommends a 50/30/20 budget plan and has a free budget template that is easy to fill in with your personal spending data.

Pocket Guard

„PocketGuard“ leidžia lengvai kontroliuoti savo pinigus, optimizuoti savo išlaidas ir automatiškai padidinti savo santaupas. Susiek savo bankus, kreditines korteles, paskolas ir investicijas vienoje vietoje, kad galėtum sekti savo sąskaitų likučius, grynąją vertę ir dar daugiau.

Mano piniginė

“My Wallet helps you keep track of not only your budget, but your family’s too. The app keeps track of your expenses by different spending groups and provides income and expense balance sheets. It also has an additional feature that allows you to back up and lock your app data.

Acasa

This app allows you to create a joint budget with your family, friends or colleagues and keep track of balances, expenses and cash management. The app is perfect if you often share your expenses with others.

Monefy

This app allows you to not only track your spending, but also plan it. “Monefy is easy to use: you can enter several different currencies and control recurring payments.

Toshl finance

Here you can set a spending limit, track cash, bank account and credit card spending. Categories can be broken down into even smaller sections. There is also a function to set how much you intend to spend and to receive an alert message when you are close to the limit. Expenditure and income can be tracked in charts, tables, graphs or a map of spending locations.

Goodbudget

This app is based on the old savings system, so you can put your entire budget in digital envelopes. Two users can share one account, so it’s possible to plan joint spending.

Spendee

This is one of the most popular apps for keeping track of your finances. This app makes it easy to keep track of your spending and income – you can put the money you spend in the category you want, and all the statistics are displayed in graphs and charts. You can also take a picture of your shopping voucher and assign it to the category of your choice.