Manage Your Money The Right Way in 7 Simple Ways!
No matter how much money you make, you’ll always be able to spend more. Having good financial skills can alleviate stress in many other areas of your life, and if you’re struggling, living paycheck to paycheck, these tips are sure to help improve your spending (and saving) habits. That’s why, in this article, I’m going to be sharing with you 7 easy and effective ways to manage your money and get your accounts back on track.
1. Have a Budget
First and foremost, you need to create and stick to a budget. Now you don’t have to be a math whiz in order to create a stable financial plan for yourself, you just need to understand basic addition and subtraction.
Many people don’t want to take the time to create a budget for themselves. They think it will be boring to list out their expenses, match it with their income, and make sure it all lines up, but if you’re bad with controlling your spending habits then there’s no excuse to avoid creating a budget for yourself. If all it takes to get back on track is taking a few hours per month to budget, then it’s absolutely worth it. A penny saved is a penny earned.
2. Use The Budget
Now that you have created a budget for yourself, use it! Taking that time to review your finances and create a budget will be for nothing – if you don’t actually take the budget and apply it to your life! This is obviously easier said than done, but if you’re able to refer to the budget a few times throughout the month, it can alleviate the stress and mystery of where you stand financially. It’s always important to know exactly where you stand, and how much money you have to spend.
3. Save Up for Big Buys
Whether it’s in relation to finance, or just life in general, learning how to delay gratification can go a long way. When you give yourself more time before making a big purchase, you not only prevent yourself from making a rash decision (by possibly putting more important expenses on the backburner), you also give yourself a chance to see if that item is something that you really want/need.
Another advantage of putting off those bigger purchases is the avoidance of putting a balance on your credit cards. When most people put purchases on credit cards, they usually end up paying a fair amount of interest on the purchase, so they end up paying more for the item than its original price, over time. By holding off on using a credit card for big purchases, you also eliminate the chance of missing a payment, and having your credit score take a hit.
For more on this, please refer to our friends at FamiliesForFinancialFreedom who write up a great post on how to save up for a large purchase.
4. Limit Credit Card Use
Credit card use and bad spending habits are a terrible combination. When your bank account isn’t looking its best, you always have the credit card to fall back on if you need to buy more. The problem is, when we use our credit cards, we often spend without thinking about whether or not we can afford to pay it off later. Try to resist using your credit card for any purchases, big or small, but if you absolutely need to use your card, try to only do so on small purchases, as they are easier to pay off in full and get your credit balance back to zero.
5. Add to Savings Often
Regularly putting money into your savings can create healthy financial habits for yourself moving forward. Most employers even offer direct deposit services where you can divvy up your paycheck into different accounts, like checking, savings, or your retirement fund.
The funny thing about putting a percentage of your income into savings is that you usually never even notice the missing 10-20%. It’s almost as if, if the money is in our account it will get spent either way. Say you have $1000 coming in every month, for example, and you put 10% into savings. If you only have $900 you will make it work, and you will only spend $900, whereas if you had all $1000, you’d also make it work and spend all $1000. Chances are you won’t miss the extra $100, and it’s better to set it aside instead of buying something that ultimately doesn’t serve you. Try to put a little bit aside after every pay day, and after a while you’ll be glad you did!
6. Track Your Spending
Tracking your spending can help give you an accurate picture of where you stand financially. It can tell you where your money is going, and give you the chance to choose where you’d like it to go instead. You may be surprised by how much of your income goes to small purchases here and there, like food and transportation.
It’s easy to track your spending when you start with a shorter time frame. When it’s all laid out in front of you it’s easier to identify small tweaks and changes that can maximize your check and minimize your spending. A good place to start is to list out your monthly bills, so that you know what is coming out your check as soon as you get it. Another good step would be to track your out-of-pocket expenses for one week. You can do this by collecting all of your receipts for the week, or by keeping a small notebook to jot down in when you spend. Doing this will paint a much better picture of your spending habits.
7. Limit Unbudgeted Spending
Last but not least, make sure you limit your spending after paying off all of your expenses. After we pay our rent, internet, water, phone bill, car insurance, car payment etc. we usually have some excess cash lying around. You can use it for fun or entertainment, but don’t get too crazy with it. So before you go buy a new Xbox, make sure that that purchase doesn’t interfere with some other expenses you may have later in the month.
For more on these types of uplifting posts, please have a read of our 5 Tips For Men To Increase Self-Esteem post here.
