Money management is not natural to most people. It’s not a skill we’re born with, and most of us can go clear through our school days without even hearing the term. So what happens when, as adults, we suddenly get the shock of being responsible for our own money, without any management tools in our pocket? Fortunately, in these days, there are many places online to go to for help. You can download free articles, subscribe to money management blogs or even speak with financially successful friends. Before beginning the learning and understanding process, there are a few tips that are basic to any type of financial planning.
Starting with a Budget
It makes no difference who you learn management skills from or which method you choose; you won’t get very far without a budget. Good budgeting is the basic cornerstone of money management. Using it as a solid foundation, you will be able to tweak and adjust it as you get some experience with it. To create your budget, make a list of all your income. Set up another list with all your payables for each month. Be realistic; this isn’t a place where you’re trying to reduce your expenses or increase the amount of money you want to bring in. Keep track of all income and expenses for a 3-month period and you can be precise. The end result is what is important. After you determine your balance at the end of the month, you can begin finding options to increase your income or reduce your expenses.
Saving Your Pennies
After becoming familiar with your income and expenses, begin to set aside funds in a savings account. Whether you have extra money to set aside or you don’t – it makes no difference. On your budget, putting money into savings on a regular basis needs to be right up there with rent, transportation and food. One of the easiest ways to do this is to set up an automatic savings account through your bank. On the day your paycheck lands in your account, ask the bank to automatically forward money into a savings account. Even if you are ending the month in deficit, you can still find a way to start small, like with 3% or 5%. Shop around to find the best terms, so your money will grow with interest. As this fund begins to grow, split off a portion to save permanently for retirement, but leaving enough behind for emergencies.
Understanding Your Financial Goals
If you don’t comprehend how to earn money, how to spend it or how to save, you’ll have very limited control over your finances and won’t make smart financial choices. Simply put, you will have a lot of “holes in your bucket” that will drain away every cent you earn. No matter how old you are or how much money you have, put time into learning and planning so that you will have finances that will grow. At the end of the day, you will find the power in controlling your own money.
