If you are living from one paycheck to another with nothing to show at the end of each month, the chances are you need to manage your money better. And even if your life isn’t filled with money problem, it is likely you can still make improvements.
Having good financial skill improves the quality of your life. Here are eight ways to manage your money better.
1. Make a budget every month
This is the most important of all money advice. This is a common knowledge but very few people do it. The reason could be that they find it boring to go through the number. Sit and make a budget every month and see your financial life improve.
You don’t need to be a math genius to prepare a budget. How to go about it? Take a piece of paper and divide it into two. On the left should be the column for your revenue, money coming in, while the right should be your expenses, the money you expect to go out. The money expected to go out is where the problem lies. Make sure you add every important bill for that month with emergency funds and money to save for investment included. Always make sure the money coming in equals the one going out.
2. Consult your budget for large spending Decisions
Here is a common mistake, you want to buy something nice and you have just been paid, You know you have the money in your account to pay for it. Well, don’t assume that you have the disposable income for it. Check your budget to see if you can justify the expense.
If the extravagant item you want is important to you, then, you have to save up for it. Save a percentage of your income every month to get it.
3. Keep track of smaller expenses too
Small purchases here and there add up to something large and if we don’t keep track on them, they can leave us in debt. People that say they don’t know where there money goes every month are those who purchase small things that were never budgeted for.
If this is a problem for you, try writing the things you want on a journal. This journal should be with you whenever you are going out.
4. Get your debt under control
If you have debt, the first thing is to get it under control and don’t pick on any new one. Second, schedule all your debt payment and make sure you pay on time. If you have a list of debts, pay off the ones with high interest rates first. Don’t get involve in debt expect you are sure it will make you more money.
5. Keep Track of monthly payments and limit them
This could be subscriptions you don’t really need. It could be a gym membership that you use once and forget about. Cut down on your payments to manage your money better.
6. Have an emergency fund
Keep aside some money for the unexpected. you never know when you will need it. Unexpected repairs on your car or house, a piece of equipment you need to buy because something broke, medical expenses. Make sure you have an emergency fund for these unexpected things.
7. Have a monthly savings goals and keep it in a separate savings account
So, the end game is increasing your wealth. Right? Well keeping money in the bank isn’t going to help you with this. Interest rates on bank accounts are close to zero. Make your money work for you. Invest in stocks or real estate.
To get funds to invest in stocks and real estate, you use the money you have saved for few months. That’s why you need savings goal which should be included in your budget.
8. Constantly improve your knowledge on money management
Maybe you feel like a beginner when it comes to managing your finances but remember that every guru on financial management was once a beginner too. Read books and watch videos on financial management. There are free online courses you can take to improve your finance.