Managing money is a tricky topic. Many people feel nervous when they hear about the subject. In this article we will provide Top 10 Money Management Tips.
You might have waited too long to start saving for retirement. Or maybe you’re worried about not having enough money set aside for emergencies. No matter what your worries are, now is the best time to get a handle on your money. It’s best to start building good money habits as soon as possible. Here are 10 Money Management tips to help you start managing your money.
Top 10 Money Management Tips
Top most important 10 Money Management Tips are:
Tip 1: Know how you want to spend your money.
Before making a budget, you need to decide what’s most important to you. If you skip this important step, your financial plan won’t work.
To get your money goals and money habits to work together, you need a focus. Right now, that’s what’s most important in your life. Do you have so much credit card debt that just thinking about it makes you feel sick? You might want to pay that off as soon as possible.
Make your first priority, at least to start, whatever is most important to you.
Tip #2: Figure out how much you’ll be paid each month.
How can you keep track of your money if you don’t know how much you make every month? If you don’t have a specific number, figure out how much you make each month after taxes. This will be easier if you have a steady job that pays you a salary. Freelancers may have to guess how much money they make each month.
Add any extra money from side jobs once you have a number. You might babysit sometimes, have a blog that makes money from ads, or teach a fitness class once a week. Add any extra money you make to your take-home pay each month.
Tip #3: Keep track of where your money goes.
It’s time to be a detective when it comes to your own money. You’ll need to do some financial forensics on yourself to get a full picture of how you spend your money. If it seems too much, just focus on one month’s worth of bills.
Pull out your credit card statements, housing and utility bills, bank statements, including ATM withdrawals, and any records of electronic payments, like Venmo or PayPal. Open a spreadsheet or pull out some paper and a pen, because it’s time to add up all of your expenses.
As you look at your spending, it helps to put things into groups. For example, you could mark purchases as “needs,” “wants,” “savings,” or “debt.” Or, you can get more specific by adding things like “fun,” “food,” “travel,” and “transportation.” It’s up to you how much you want to get into the details.
After putting all of your expenses in one place, add up each one to see where most of your money goes. You might be surprised by how much you spend on food when you eat out. Or, how much of your income goes toward housing costs compared to how much you make.
Tip No. 4: Make a plan.
It’s time to make a plan now that you know how much you make and how much you spend. The first money management tip says that the best financial plans match your priorities with how you spend your money.
Let’s say you like to stay in shape. When you added up all of your costs, you found that you spend money on a gym membership, a yoga class card, and new sports gear every month. You won’t have to get rid of that if it’s important to you. But if you want to reach your goal, let’s say it’s an emergency fund, you’ll have to cut costs somewhere else. That could mean going to a discount grocery store or packing your own lunch instead of ordering takeout with your coworkers.
You might set up automatic deposits to a “emergency fund” savings account to help you reach your financial goal. When you deposit your paycheck, it is gone before you can think of it as spending money.
It’s up to you if you want to pay for a budget programme like YNAB or use a simple Excel spreadsheet.
Tip #5: Follow your plan.
Try your plan for at least a month after you choose it. You need that much time to find out if it works for you. Less than that, and you won’t see why it’s important to keep an eye on your money.
So choose a budget you want to try, start using it, and stick with it. It’s really that easy. If you want, Washington recommends you “surround yourself with visual representations” of your goals. So if you’re saving for your next international trip, you can put up pictures of your dream trip to keep your goal fresh in your mind.
Tip #6: Expect Emergencies
Regardless of what your priority is, you’ll want to have some easily accessible liquid funds.
Maybe you’re focusing on paying down your student loans, and you’re not concerned with building a hefty emergency fund. That’s fine, you don’t absolutely have to save six months of expenses. But you should save up for at least three.
Who knows what could happen? You or your partner could lose your job or have a health emergency, among other things. Life goes on whether you like it or not.
If you have money to deal with problems as they come up, you’ll feel more secure and ready. Most emergencies are stressful enough on their own. Take some of the worry away by setting aside some money.
You can save money for emergencies in any way you want. Maybe you put all of the money from your side job into an account that you only use in an emergency. Or, it’s where any money you get for a birthday or as a gift goes. It could be as easy as making a small automatic deposit every month. It depends on you.
Tip #7: Save money early and often
This rule is true no matter how important something else is right now. The sooner you start saving, the sooner interest can start to build up. To start earning interest, you don’t even need a savings account. Most of the best savings accounts pay interest, and the FDIC protects those accounts. This means that, unlike with a brokerage account, you don’t run the risk of losing your money.
This also holds true for retirement. You should put money into an IRA or 401(k) as soon as possible. Even if you have years before you retire, you should still think about the future. If you start as soon as possible, your money will grow the most.
Tip #8: Use money that is given to you for free.
You don’t want to miss out on the resources you have. If your employer matches what you put into your 401(k), you should definitely take advantage of it. It costs nothing.
The plan for your health care is another place to look. Do you pay out of pocket for glasses or contacts when some of the cost is covered by your plan? Your job might give you a discount on a gym membership. Use all the perks your job offers; you could end up saving a lot of money.
Tip #9: Relook Your Debt
Look at all of your debts (money management tip No. 2). Can you refinance anything to get a lower rate? Maybe it’s moving a credit card balance to one with a lower interest rate. Or, it could be called combining student loans. You should go through your debt with a fine-tooth comb to see if you can find a way to save.
Tip #10: Find what works and do it again and again.
“If it’s not broken, don’t fix it” is another common saying about how to handle money. Once you find a system that works, don’t let new apps or different financial advice take your attention away from it.
It can be tempting to try the next best thing, especially if it promises to be easier, simpler, or faster. But if you’re saving money, reaching your financial goals, and building security, keep doing what you’re doing. Your hard work will be worth it.
These 10 Money Management Tips are very important for everyone.