Do you ever feel like you are living check to check and you just need to know how to manage money better? Do you feel like you are just working to pay bills? No worries! You are not alone. Knowing how to manage money wisely is a skill and it doesn’t come naturally to everyone. There are certain aspects from how to pay your bills to how you save your money, which are necessary and should be given careful consideration. Optimizing the potential of each dollar means better results for your financial life. Better results for your financial life rely solely upon your willingness to learn these skills. The good thing is, it’s not really that hard and the rewards for being a good money manager are great. It takes stress out of your life worrying about finances is really bad for you and makes you feel more in control and independent. Anyway, to help you on your way, here are 7 simple tips that will help you on your way to managing your money better.
First and foremost, write down all of your bills and expenses (including gas, grocery and entertainment). Be honest because you need to know how much you spend each month. Once you write down your bills, compare it to your monthly income. This will give you an idea of how much money you have going out and coming in. It’s important that you know how to manage money wisely and this is the first step. Create a spreadsheet that will also allow you to track all of this information. Update it every month to create a habit of tracking your monthly expenses.
Instead of sending out individual checks for each bill, use bill pay with your bank. This will allow you to pay all of your bills from one source that automatically tracks it for you. You can see monthly how much you are paying out in bills and it will keep you organized and help you to continue to stay within your budget.
Whether you get paid every week or bi-weekly, you should have 10% of your check automatically drafted to a savings account. This is money that you will only use for emergencies. Have you ever had an unexpected car expense to come up and you just did not know how you were going to pay for it? You don’t have to worry about that anymore, because now that you are building your savings account, you will always have money that will allow you to handle any unexpected situation.
If your job offers a matching 401K, then you should definitely opt in. Talk to your employer about employer matching for their 401K retirement insurance plan. This is a retirement insurance benefit to you that will become very valuable. It works very much like a savings account, however, your employer doubles whatever you put into it. If you automatically draft $500 a month to your 401K, then your employer also contributes $500. You just made $1000 for that month. If your employer does not match your contribution to your 401K, then another valuable option is to talk to your banking institution or a financial advisor about opening a Roth IRA. Roth IRA’s are investments in mutual funds, stocks and bonds, and more. Talk to a financial advisor about the benefits. 401K and Roth IRA retirement plans are smart investments.
If your monthly income is $3000 after taxes, do not create expenses for yourself that equal up to your monthly income. This is a financial recipe for stress and disaster. Your expenses should only total up to 50% of your monthly income. For example, your rent should be no more than $900 a month with a monthly income of $3000. That leaves you with $600 for bills and expenses. The other $1500 should be used towards managing your money wisely by investing in retirement plans, savings accounts and assets.
Do you ever just have spare change in your car, around the house, or on your dresser? Take that change and create a bonus account. A bonus account is where you put aside money for special items, events, or a pair of shoes that you just have to have. Find an old container in your house and label it the bonus account. At the end of each week, find all of your spare change, including one dollar bills and put it in your bonus account. Keep this in the house and watch over time all of the money add up and before you know it, you would’ve saved money for those shoes or a date night that you have been eager to go on.
When debt begins to pile up it can be overwhelming. It can sometimes feel like you owe everybody all at once. The best way to manage money better in this situation is to pay off all small debts first, and then slowly build toward paying off larger debts. If you owe $50 to one creditor, $200 to another creditor, and $2000 to another creditor, pay off the $50 first. This may mean that you will need to send in two separate payments of $25. If that’s the case, do what works best for you. Do not extend yourself and add any stress or worry. Be in control and pay it off in several payments. Once you have paid off the $50, then contact the next creditor and pay off your $200 debt. Continue this cycle until you have it all paid off.
Knowing how to manage money better takes time, effort, discipline and consistency, but it can be done. Just use these tips and you will have a great start to being in control of your finances and building a better financial future for yourself.
1) Create a budget
First and foremost, write down all of your bills and expenses (including gas, grocery and entertainment). Be honest because you need to know how much you spend each month. Once you write down your bills, compare it to your monthly income. This will give you an idea of how much money you have going out and coming in. It’s important that you know how to manage money wisely and this is the first step. Create a spreadsheet that will also allow you to track all of this information. Update it every month to create a habit of tracking your monthly expenses.
2) Bill pay helps to manage money wisely
Instead of sending out individual checks for each bill, use bill pay with your bank. This will allow you to pay all of your bills from one source that automatically tracks it for you. You can see monthly how much you are paying out in bills and it will keep you organized and help you to continue to stay within your budget.
3) Delegate at least 10% of your income to your Savings Account
Whether you get paid every week or bi-weekly, you should have 10% of your check automatically drafted to a savings account. This is money that you will only use for emergencies. Have you ever had an unexpected car expense to come up and you just did not know how you were going to pay for it? You don’t have to worry about that anymore, because now that you are building your savings account, you will always have money that will allow you to handle any unexpected situation.
4) Invest in Retirement Plans (401 K or Roth IRA)
If your job offers a matching 401K, then you should definitely opt in. Talk to your employer about employer matching for their 401K retirement insurance plan. This is a retirement insurance benefit to you that will become very valuable. It works very much like a savings account, however, your employer doubles whatever you put into it. If you automatically draft $500 a month to your 401K, then your employer also contributes $500. You just made $1000 for that month. If your employer does not match your contribution to your 401K, then another valuable option is to talk to your banking institution or a financial advisor about opening a Roth IRA. Roth IRA’s are investments in mutual funds, stocks and bonds, and more. Talk to a financial advisor about the benefits. 401K and Roth IRA retirement plans are smart investments.
5) Manage money better by living below your means.
If your monthly income is $3000 after taxes, do not create expenses for yourself that equal up to your monthly income. This is a financial recipe for stress and disaster. Your expenses should only total up to 50% of your monthly income. For example, your rent should be no more than $900 a month with a monthly income of $3000. That leaves you with $600 for bills and expenses. The other $1500 should be used towards managing your money wisely by investing in retirement plans, savings accounts and assets.
6) Save your change
Do you ever just have spare change in your car, around the house, or on your dresser? Take that change and create a bonus account. A bonus account is where you put aside money for special items, events, or a pair of shoes that you just have to have. Find an old container in your house and label it the bonus account. At the end of each week, find all of your spare change, including one dollar bills and put it in your bonus account. Keep this in the house and watch over time all of the money add up and before you know it, you would’ve saved money for those shoes or a date night that you have been eager to go on.
7) Pay off debts smallest to largest
When debt begins to pile up it can be overwhelming. It can sometimes feel like you owe everybody all at once. The best way to manage money better in this situation is to pay off all small debts first, and then slowly build toward paying off larger debts. If you owe $50 to one creditor, $200 to another creditor, and $2000 to another creditor, pay off the $50 first. This may mean that you will need to send in two separate payments of $25. If that’s the case, do what works best for you. Do not extend yourself and add any stress or worry. Be in control and pay it off in several payments. Once you have paid off the $50, then contact the next creditor and pay off your $200 debt. Continue this cycle until you have it all paid off.
Knowing how to manage money better takes time, effort, discipline and consistency, but it can be done. Just use these tips and you will have a great start to being in control of your finances and building a better financial future for yourself.
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