Better money management should never be taken for granted. Earning money is awesome but being good with money is even better. Sometimes money, if we are not careful, can have control over us.
A healthy financial future is not based on how much we make but it depends on how good we manage and plan. So it is imperative that if we are good at managing our money then we will have a headache-free and successful financial future.
What is Better Money Management?
Money management is pretty much how you control your money, where you want them to go and what you want them to do. This includes earning, spending, saving and investing.
Better money management involves careful planning of these things. Creating a budget, saving for an emergency fund and tackling debts are all part of better money management.
Some people may think that better money management only consists of saving a fixed amount every month or paying bills on time. However, it does not stop there. It is about everything you do with your hard earned money.
How to get started with Better Money Management
Keep Track of All Income
The first thing you want to do is figure out how much your household is making. The total will include earnings from your full-time job and other side hustles.
Knowing how much you make will give you a sense of how much you should be spending. Sometimes we spend lavishly thinking that we are earning enough to cover whatever we are spending on.
Create a Monthly Budget
Now that you know how much money is coming in, it’s time to see where your money is going. You will need to figure out your expenses in the last 30 days.
In order to do this, you will have to print out bank statements, credit card statements, and
Check out the Best Guide to a Monthly Budget to know more how to set up a monthly budget.
Now that you know your total income and your total expenses, subtract total expenses from the total income and the difference should be the left-over of your monthly income.
Pay your Bills on Time
Paying bills on time not only saves you from those hefty late payment fees but it will also help build you a better credit score. One way to pay bills on time is through automatic payment, either through your bank or through the billing company site.
Save for Emergency Fund
Emergency Fund is simply an amount of money saved to take care of unexpected emergency expenses. These expenses include home repairs, car repairs, medical expenses, loss of job and etc. It is always recommended to have at least $1000 in the
For an expense to be qualified as an emergency, it should be necessary, urgent and UNEXPECTED.
Tackle your Debts
It is always best practice to tackle your debts when you have extra money. You can put some extra payments on credit cards, student loans, personal loans etc. The faster you get out of debt, the earlier you can start building your wealth.
Tips for Success in Better Money Management
Having a positive mindset will help you reach your goals faster. Changing your ways of managing money will not be easy, there will be bumps along the way for sure. However, you should not be discouraged, instead, take each mistake as a lesson and focus on the goal.
The success of learning to manage money better depends on your discipline. Better money management is not hard at all, it is the ability to stick with that makes it hard. The first few months won’t be perfect but you will get the hang of it.
Live Within Your Means
Part of having the discipline is to learn how to live within your means. You already know how much money is coming and how much is going out. Use this as a guide to be able to identify if you can afford an item, a restaurant dinner, a Broadway show, a new car, etc.
Common Questions/FAQ About Better Money Management
- How much emergency fund should I save?
- It is recommended to have at least $1000 in the emergency fund.
- Can I save and pay debts at the same time?
- It is recommended to pay all debts except mortgage first before saving.
- When should I start budgeting?
- The right time to start budgeting is NOW.
- Is using a credit card still part of better money management?
- Yes if you practice discipline to not carry a balance on the credit card every month.
- What are some reliable budgeting apps?
Everydollarand Mint are some good ones.
- When should I start saving?
- Best to start saving once all debts except mortgage are paid
The Last Thing You Need to Know about Better Money Management
As I have said, the first few months won’t be perfect but you will get the hang of it. In fact, I myself still is not a master of better money management but it’s ok at least we are in control of our money, not the other way around.
To learn more about managing your money, check out this book.
How about you, how are you managing your money? How are you sticking with your plan?