What is Money Management?
We always hear about money management and see articles talking about it almost all the time, but what exactly is it? It’s pretty much anything that is related to money, from budgeting, saving, and investing, all the way to the act of spending itself. Planning out each and every one of these things is what money management is all about. In fact, this is exactly how most millionaires built their fortunes! Just playing it smart, taking worthy risks, and gaining profit. This blog is not about turning you into a wall street guru of course, but you get the idea. Now, without further ado, let’s get to the fun part.
Our Best Money Management Tips & Advice:
1. First Things First, a Stable Income is Everything:
People struggle most in making a good money management plan when they don’t have a clear and stable income to build that plan on. If you’re a freelancer, for example, money will come in waves, and it won’t be the same amount every time, as if it was a good amount, to begin with. When you know how much money you’re making in a year or a month, the road ahead would be quite clear, and it would be much easier for you to make a great plan and predict any possible obstacles.
2. Now, It’s Time to Make Your Budget Plan:
When you feel the impact of financial stress, it would overwhelm you and you would start spending your salary impulsively. Set those worries aside, regain control, then start making your personal well-thought-out budget plan. Creating a good plan would help you make the best out of your money, and it would make your spending habits much healthier. If you’re not familiar with creating your own budget plan by yourself, follow these simple steps:
2.1. Calculate Your Entire Monthly Income:
This will include your current job’s salary and/or any other source of income like bonuses and side hustles and freelance projects.
2.2. Calculate Your Monthly Expenses:
They can include expenses, such as paying bills and rent, food, loans, transportation, and any other thing that falls under the category of life essentials. You could use an average from previous months to calculate monthly payments that aren't always the same, such as food and utilities.
2.3. Subtract The Monthly Expenses From The Total Income:
Your budget will start with this amount. Whenever you're paying down debt and building savings, you're left with these remaining funds. In the event that there isn't enough left, you may want to reduce your spending on magazines, subscriptions, takeout food, or whatever else you haven't already reduced.
3. Be One Step Ahead of Your Spending:
When things get tough, using healthy money habits is a great way to prepare for them. One of those healthy habits could be tracking your spending. Keeping your budget in check may help you avoid overspending. Now you might ask, what is the best way to keep track of my spending? The answer would be simply to take notes and write down what you’re spending your money on. Knowing where all the money is going is a very important factor in redirecting that money to a more mature and safe route which will be very beneficial in the future.
4. Save Money for Emergencies:
As we all know, life is never predictable. Hardships could fall on any of us at any given moment. The best way to fight back is to have some money set aside to solve any upcoming crisis. You might ask, how can I save extra money for emergencies if my income is not that big? Here are a few simple solutions:
4.1. Find Some Side Hustles:
Believe it or not, extra money is everywhere and you have to really look for it to find it. Get a freelance gig, provide some services online in your free time, and work a little extra hard for a bonus every now and then.
4.2. Buy What You Need, Forget What You Want:
Most people don’t really think about this, but when you actually spend money on only what you need and keep the rest of the money in the bank, you will notice a significant change in your account balance. Not the most pleasant way to make extra money, but we promise you that it’s worth it.
4.3. Stay Away From Debt:
No matter what, stay as far away from debt as humanly possible. As tempting as it can be sometimes, it can definitely be your money management plan's worst enemy.
5. Speaking of Debt, Get Rid of It Now:
If you have any debt, your only main concern should be to pay it all before it kills you. If anything is standing in the way between you and financial freedom, security, and stability, it’s debt. Finding a healthier way to deal with your sudden emergency expenses is a far more preferable decision to make. Debt should always and forever be your very last option.
6. Keep It Real:
Some people can get seriously obsessed with getting rich that they start making every wrong decision and approach there is to take. Blind investments, unthoughtful strategies, over-saving, and a lot more things can get into the mind of an obsessed person only leading them to their financial demise. Keep your plan and your mindset realistic, don’t lie to yourself and don’t be a fool. Each step of this journey should be carefully calculated and keeping it healthy would make the whole process much easier for you and everyone involved in your money management plan.
7. Get Professional Help if You Can Afford It:
If it’s affordable to you, getting professional help is always a great idea to put yourself on the right track of things. Asking for an expert’s advice can save you a lot of precious time during your journey, time that can be spent making more money. You won’t need this type of professional help forever, you can just understand the essentials and then continue the work on your own. This way, you wouldn’t spend a lot, and at the same time, you would save yourself years of wasted or misused funds.
Bottom Line:
It's okay to feel stressed about your finances, managing your finances, or saving money. You're not alone. Nevertheless, you now have a better understanding of managing your money, setting your monthly budget, paying off debt, and building an emergency fund. These are all useful tools that will help you at every stage of your life.
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