A lot of people avoid money chores: chores that require us to analyse our spending and think of ways to save more money for the entire month. Well, fret not. We are here to give you some pointers that allow you to better manage your money.
Know where your money flows
To gain control over your financial situation, you need to know where your money flows each month. Start easy by writing down everything you can remember about your spending last month. Compare your memory with your actual spending taken from your bank and credit card statements. Once you see how you are spending money each month, you will most likely notice that some small amounts of money seem to disappear, which can add up to a big sum of money in a year. After noticing these small losses, set some ways to prevent them by making small changes in your habits. For example, if you go out to have lunch every workday, you can start bringing your own lunch from home, which will be cheaper and much healthier.
2. Make time to manage your money
Think of financial planning as a daily, normal routine that you must go through in order to maintain a healthy financial life. Put some time each week to think, talk and learn about money management. Just put in 30 to 60 minutes each week to do financial planning, and if you have a partner or spouse, talk with them about creating a sustainable plan together.
3. Organise your financial papers
You have to know how to get detailed information about your financial situation in order to become a better money manager. Assembling and organising this information into a system that works for you will make future financial decisions simpler. Some documents that you should keep in your home include bank statements, credit card information, investment documents, insurance, and wills.
4. Make Smarter Spending Decisions
When deciding to spend your money, incorporate some of these tips to make smarter spending decisions. First, always make a list for every shopping trip and stick to it. Next, only take cash on shopping trips and don’t spend more than what you have. Then, compare prices and notice the difference between sales and off-season bargains. Lastly, buy large quantities of things you use often, and always buy them when they are on sale.
5. Make planning to reduce debt
If you do have debt, don’t panic and follow these tactics to get you out of it slowly but surely. First, cut expenses and identify some things you could stop buying. Next, if possible, get a second job to increase income. Then, remember to prioritise debts. Pay off the highest-interest-rate debts first, and lastly keep only one or two major credit cards and try having the limits lowered.
6. Save, save and save
The money you save needs to be categorised into three areas: money for emergencies, money for short-term spending, and money for long-term goals. Emergency funds should only be used in cases of a true emergency, such as sudden medical bills or getting laid off from a job. After you have created an emergency fund, you can start saving your money to achieve other goals, such as purchasing a new car, funding for your children’s education, or creating a retirement fund.
However, the most important thing is to achieve a secure future. The easiest way to save money for the longer term is to always save a set percentage of your income before spending money on anything else. You can ask you bank to automatically transfer a set amount of money from your account to your savings each month.
7. Invest that money
To achieve long-term goals, investing is one of the best ways to see your money grow. When you invest, you are actually saving money for long-term goals such as retirement or a child’s education. Investments ordinarily consist of assets such as stocks, bonds, real estate, and mutual funds. It’s true that these types of assets possess more risk than usual savings accounts. However, they have greater potential for higher earnings in the long run.