8 Simple, Effective Money Management Tips
Learning money management skills doesn't happen overnight. For some, it takes years of financialindependence to balance their checkbooks. For those in need ofsome financial pointer, consultthe below list and review some tips on how to manage money effectively and simply.
- Do Your Research
When it comes to a large purchase such as a car, people are likely to do their due diligence in terms of research. Buyers should make sure they are paying competitive prices, along with checking whether there might be any deals available. This mindset can also be applied effectively to smaller purchases, such as groceries, home appliances or clothing. There will almost always be variations in price. You might find a sale on the same item at a different retailer, or a cheaper generic option for pharmaceuticals and groceries. The savings you make may be small, but they can add up before you know it.
- Treat Savings as Non-Optional
Set aside an amount each month to put into your savings account, and treat it as untouchable. Look to the deposit as mandatory - the same way you would your rent or your cell phone bill. If you think of your savings as an extra, only added to when you have something left over at the end of the month, you will have trouble reaching any kind of savings goal. Try to keep your savings in an account that you will not see regularly, so your temptatioto dip into it will be reduced.
- Keep an Emergency Fund
If you are unsure of what your savings goals should be, try to aim for an amount equal to three to six months of living expenses. This includes rent, and an y bills you might need to pay. Even if you never have a need for it, the knowledge that you have this safety net could reduce any financial anxieties you may have.
- Shop Online
Sometimes, deals may be available at retailers that you do not have access to locally. If this is the case, you might be able to buy the items at the retailer's online store. Even if you must pay for delivery, the savings might make the purchase worth it. There are often digital coupons and special promotion codes of which you can take advantage. Shopping online also means that you can keep better control of what you buy. Shopping at a store sometimes means picking up extra items without thinking, which can send you over budget.
- Use Coupons
Using coupons can mean huge savings on your purchases. There are many resources online that show how to use coupons effectively - by buying in bulk or by combining different coupons. It sometimes seems like a lot of effort and extra research, but the rewards can be enormous. That said, it also important not to use coupons just because you have them. Buying something you do not need simply because it is on sale is still spending unnecessary money.
- Go Green
Many ideas on how to live in an environmentally conscious way are also applicable to budgeting. Using energy-efficient light bulbs can reduce your electric bill. Carpooling or driving slower to work cuts your gas costs. Reducing consumption of meat and using other protein sources will lessen the amount you spend on groceries. The lower the impact of a purchase, the cheaper it will be.
- Keep Track of All Purchases
Once you have set aside the larger amounts of your budget for rent, utilities, groceries, etc., it is tempting to leave the remainder of your money as undesignated. Of course, you cannot predict every single purchase you make in a month. You can, however, keep track of them as you make them. Small incidental purchases and expenses add up quickly, and you may be left at the end of the month wondering where the rest of your money went. There are several ways to keep track of daily spending. You could keep a money journal or a spreadsheet, or there are several smartphone apps available that will keep track for you.
- Reassess Regularly
Either once a month or once a quarter, set aside time to assess your budget, your spendingand your net worth. Even if nothing in your circumstances has changed, this is an opportunity to note any bad spending habits that you may have slipped into and adjust. If you have savings goals that you want to reach, this is a good time to see how far you have come,and address whether there are any changes that need to be made to your savings plan. Relying on irregular check-ups of your bank statements often means letting things slide andfailing tohold yourself accountable for your spending and saving habits. By scheduling a detailed assessment and sticking to it, you can keep yourself on track and maintain better control of your finances.