You probably know that graphs are not just for science. Any time you see a chart, it is considered to be a graph. But maybe you didn't realize how important graphs could be when it comes to your finances. Businesses use graphs to track the success or failure of different projects and their prices.
With that in mind, here are some examples of how you can use a graph maker to make your finances easier.
One of the most common graphs that you'll come across is a line graph. This means that it has a start point and an endpoint but all of your points in between are connected with a straight line.
A steep slope indicates that you need to create a budget because you're spending more than you're earning. It might be time for you to pay off some debt or save up for an emergency fund if your income isn't keeping up with purchases.
When budgets become too tight, plan ahead by using two bar graphs instead of one. Create one graph with monthly payments on each side and put them at an angle. Put your income on the left bar graph and the tuition payment on the right one. This will indicate if you can afford to send your child to private school or not early enough so that you don't have to take out a loan.
If you buy a new car every five years, it might be time for you to start looking at cars with price tags attached because of how frequently you're buying them. But by using a line graph, you can see when exactly your salary is high enough that you can afford this purchase as well as what kind of car would still fit into your budget.
On the y-axis, put your yearly income and along the x-axis, the price of your dream car. If you can't afford it yet, draw a line to the point where your income and the car price intersect and then use this intersection as a marker for when you'll be able to afford it.
Those who plan on saving will notice that their money tends to go into different categories such as rent or utilities. Make sure that you're not overspending by using a pie chart instead of a bar graph. This will help you determine how much of your savings goes towards each section so that you can make adjustments if need be.
Everyone has trouble at tax time because they don't realize how much money they've earned. By using a line graph, you'll know the amount of money that you made over the course of an entire year so that taxes can be paid earlier. On the y-axis, put your total income and on the x-axis, put in the months. Draw a curve to each month where your income was collected just like how it's done with bar graphs.
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Sometimes people neglect to put aside funds for retirement because they don't realize how much is being taken out of their paychecks. To make sure you're saving enough for retirement without wasting too much money, use two-line graphs instead of one.
One will depict how much you owe the government in taxes while the other line graph will show how much you're setting aside for your retirement. If the two graphs intersect at a point where your income and the tax amount are higher than your savings, consider increasing how much you save.
Debt can accumulate very quickly without anyone noticing it by using a line graph. Plotting each debt on its own axis will give you a clear indication of just how long it'll take for your debts to be paid off once they're consolidated into one monthly payment. Look for a point where all of the lines intersect with each other because that's when all of them have been paid off completely
At first glance, you might be wrong about how much money you make even if you've been working for the same company for several years. Averages and trends can easily fool people and cause them to underestimate how much they're actually making by using a line graph.
This will allow you to see where your salary stands as well as other critical information such as how it compares with those around you and where it's likely to end up in future years.
Graphs make it very easy to see where you stand in terms of finance or even other areas in your life. This can be detrimental if it's highlighting an area where you're not doing too well but it does give you more power over the situation since you know what needs to be done to improve yourself.
With graphs, you can plan ahead and save for different stages, whether that's school or retirement so that you don't have any problems later on down the road.