How to Manage Your Money Wisely

11
October

If you’re reading this article, chances are pretty good that you’re here because you don’t know how to manage your money and may have made some poor decisions in the past. Like, maybe you gave your personal information to a “King Juhabi” from “Uganda” because he wanted to “deposit $70 million” in your bank account. Or maybe you were never taught how to budget, were taught poorly, or just never thought a budget was something you needed. But now, for whatever reason, you need some tips on how to make a budget work, and work now. Here, I offer five practical tips on how to manage your money wisely.

Tip 1: Use Paper, Not Plastic

Use cash whenever and wherever you can. Dump the credit cards. The reason for this is that cash will prevent you from overspending. When it’s gone, it’s gone. It is much easier to swipe a credit card and spend too much because you don’t see the money physically leaving your wallet or purse. When you carry cash, you know exactly how much you have and it’s impossible to overspend. Another reason to use cash: psychology. Most people don’t like to spend cash, they would rather hold on to it (I know I would!). Because of this, using cash will probably subconsciously help you spend less.

Tip 2: Pay Yourself First

That’s right, pay yourself out of every paycheck. Take a little out of each check and make sure you get some money to spend however you want. Whether you spend it on coffee, games, exotic pets on the black market – whatever you like to spend it on. The reason for this is so you always have your own cash to use and you won’t dip into money that should be going to, say, your mortgage. Everyone needs a little to spend on themselves, so don’t skip this.

Tip 3: Have a Written Budget

Don’t have a budget just made up in your head. It is far too easy to forget what you’ve spent and what you have left, what bills are coming up, who’s birthday is next week, and what concert you might decide to go to. This article is too short to go into the details of making a budget, but suffice it to say that you need to know three things for every month: (1)How much money you will have (2) How many expenses you will have (3) How every penny will be spent. All of this needs to be written down so you can allocate every penny of every dollar, whether it’s for rent, utilities, credit card bills, etc.

Tip 4: Evaluate your Spending

If you are having a hard time paying bills each month, you may need to sit down and seriously think about how you spend and how you can save. Do you eat out a lot? If so, you’re spending a lot more money than you would if you cooked at home. Get yourself a simple cookbook and start making easy meals. You’ll be surprised how much you can save. If you are a coffee drinker, try making it at home, drinking less frequently, or finding a cheaper place to buy your coffee. Food is not the only category where this applies. Think about where you buy clothes, how much you pay for cable, your cell phones, internet, monthly subscriptions, etc. If you are struggling to make ends meet, everything area of spending should be taken into consideration.

Tip 5: Don’t Finance Anything

I know this sounds crazy, but if you want to be wise with your money, save for big purchases and don’t finance anything. This will mean having a plan and sticking to it in order to buy the pony (or car) you’ve always wanted. There are several great things about buying without having to finance. First, you can get a great deal. Second, you won’t have any monthly payments hanging over your head. Third, you won’t pay any interest, which is the equivalent of lighting your money on fire or flushing it down the toilet.

Remembering and practicing these five tips will help you get your finances in order and help you manage your money wisely. With all this in mind, you should be well on your way to working yourself into a better financial situation in no time, no thanks to King Juhabi.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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