When it comes to money management, there are tips you should always have at the back of your mind. Contrary to what you may think, money management is not for just the poor or low-income earners. In fact, money management is the reason wealthy people are able to hold on to their wealth. And when you think about it deeply, being good with your money is not rocket science. With these simple tips, you can ensure that you are not just making money, but also keeping your money. Let’s dive in!
1. Start now
When it comes to money management, the best time to start was yesterday. The next best time is now. You do not have to wait until you x23 your income. Start now and start with what you have. You never know how organized your life will be until you actually get your money game together. Having a better financial life is not always about making more money or getting an extra source of income. Most times, it is about spending wisely and making the best of what you already have i.e. good money management skills. So first tip: start now. Start with this blog post. Get a pen and paper. Let’s go.
2. Know how much you have or will have
I don’t just mean how much you have in your bank account right now; I mean what is your weekly or monthly income? If you earn monthly, how much do you start the month with after deducting tax and other compulsory levies? Add up all your multiple sources of income and come up with a figure. Knowing exactly how much you earn per month allows you to know how much you are working with and how much you spend every month. It shows you how much you have to save and invest. Doing this small math will take you out of uncertainty. You can now decide if you need to get an extra source of income and focus on saving or investing more.
3. Work with a budget always
Don’t just have a budget, work with it. There are many reasons to have a budget. First, having a budget helps you control compulsive spending. Not only do you know how much you are spending, you also know what you’ve spent your money on. Questions like “where did all my money go?” or “how come my salary has finished in the first week of the month?” won’t be coming up. You will actually see where your money is going. Rich or poor, having a budget is a financial tip you should learn for effective money management.
The 50-30-20 rule is a great way to get started with creating your own budget.
4. Track all expenses
Tracking helps you stick with your budget. If you have decided to spend a certain amount, tracking your expenses allows you to actually stick with your plan. How much of your money is spent on food and transportation? How much is spent on essential and non-essential items? These are questions you will always be able to answer once you begin tracking your expenses.
There are many ways to track your expenses. You can use online tools to know where your money is going or go via the traditional pen and paper way. Keeping a money diary can also help. You can choose to fill it every night before you sleep or every weekend. A good way to remember how you’ve spent is through your debit alerts and your bank statements. All this may sound hard and ‘too much’ but then, effective money management is not always a walk in the park. However, once you get started and get used to it, you will see the results clearly.
5. Settle needs before wants
This is a pro tip that budgeting helps you achieve. Write down the things you need and the things you want. Needs are essentials that are required for life and sustenance. Wants are ‘nice to haves’. You don’t really need them but it would be really cool to have them.
However, it’s not a crime to have wants but proper money management is settling needs before wants. Pay for the things that aid your living and sustenance and come back to wants with whatever you have left.
6. Remove unnecessary expenses
Do you have a lot of premium subscriptions? Do you use them all? Are there platforms you pay for but rarely use? Have you considered unsubscribing and using the free version when you need the service – which is once in a while anyway? The fact that you can afford something does not mean you should pay for it. If you bought everything you could afford, soon you won’t be able to afford a lot. Direct your money towards actual needs and remove unnecessary expenses. This is a money management tip that never grows old.
7. Have an emergency fund
When you’ve implemented all these tips, you may realize that what you’ve always needed is not an extra source of income but good money management. If this is the case for you, a good way to start may be by creating an emergency fund. An emergency fund is a pool of money set aside for unexpected financial needs that may come up in the future. Examples of emergencies: a job loss, medical condition, etc. Having an emergency fund puts you in a position of strength when the rainy day comes and you need to bring out your wallet. You can get started with your emergency fund here.
8. Educate yourself
The last money management tip you need to know is this: educate yourself. Consume every educational resource you can find out there. Do not wait until you have money or don’t have money to know about money. The right time to start learning proper money management and personal finance is now. Thankfully, we have a limitless amount of resources on money. Explore our blog and check out articles and stories that may fill your current knowledge gap. Also, you can check our YouTube if you prefer short easy-to-understand videos.
Building wealth is not just about making money, it is about managing it properly. Note that money management is not the same as not spending at all or being frugal. Money management is spending money the right way. Start out with these tips and build wealth the right way.