Financial freedom and knowing how to manage your money in the best way possible is everyone’s dream, possibly since we were a teenager and started having some money of our own. Then college came, and it’s very plausible it threw our whole plans askew, and our ideas of finance managing found themselves on the business end of a quick reality check. So, are there any tips and tricks on how to manage your money in the best and wisest way possible? As a matter of fact, there are, and we have gathered some for your consideration.
How to Manage Your Money Better – Tips and Tricks
#1. Start Tracking Your Spending Now
Here is a simple exercise you do for a month so that you can exactly see what it is you’re spending your money on. All you need to do is put pen to paper and write down or use an Excel spreadsheet to record every single item you purchase or pay throughout that month.
Once you begin to understand what’s draining your paycheck every month, you can do two things.
- Weed out all the unnecessary expenditures.
- Start planning a budget for the months that follow. This idea may sound a bit tedious or even time consuming, and it will be, at least in the beginning. However, you will notice that, over time, it will become easier and easier and save you a lot of cash.
#2. Combine Your Finances with Your Partner
If you’re married or in a serious and committed relationship in which you know you can trust your partner from a financial point of view, there’s nothing easier than putting your money together. It really shouldn’t be a type of situation where you have ‘his’ bills and ‘her’ bills or ‘your’ money and ‘my’ money.
From a technical point of view, you can both put your money into one central checking or savings account. Once you do that, you can start distributing the finances as you go. Not separating your money will rule out any fights you might have related to it and will promote better communication between you two. Therefore, by applying this tip, you find out not only how to manage your money better but also how to have a stronger and healthier relationship.
#3. Pay Your Bills the Smart Way
To be able to do this, you will need to construct a simple calendar. You can use one that you already have and just write on it when all the bills are due. You can also make your own calendar, or you can use a digital spreadsheet.
Independently of the venue you choose, the idea is to mark all the dates when you need to pay your bills and stick to them. It will help you manage your finances a lot better and in a much wiser way.
#4. Set Some Money Aside for an Emergency Fund
This idea, aside from showing you how to manage your money better, will teach you two other things. First of all, you have the actual money put on the side for any emergencies that might come your way. Think about one of your major household appliances breaking down, illness or even a funeral or a wedding in your family.
Second of all, having said savings account might deter you from using your credit card or other debt plastics you may have to your name. As we all know, even though they sound very tempting, they are not such a good idea. You will have to pay back with added interest every penny you receive from the issuer. That is not good money management.
When a personal crisis comes, you can, at least, rest assured you have the necessary money to deal with it. This idea translates into one less thing you have to worry about during those difficult times.
#5. Cash in an Envelope
As weirdly simple as this idea sounds, it really does work when it comes to tips on how to manage your money better. After you have set a budget for yourself and your family, you need to divide your monthly finances according to each category you created. Put the money in separate envelopes and use it. Be careful because you need only to use the money in the envelopes and nothing else and you must make sure it’s cash.
It’s a great way to ensure you will not overspend on anything and go over your budget and that you are in full control of all your finances. Apart from that, it will keep you from using your credit card, as we mentioned in an above paragraph.
#6. Sell Everything You Don’t Need
Without a doubt, everyone has certain items at home that they do not need. It can be a pair of old roller blades which you never have time to use, a baking set that you don’t need because you don’t really bake or a huge pile of clothes from the last seasons which you haven’t used in years. All these things need to go, and they need to go now.
Instead of thinking of it all like the stuff you own, think of it as a heap of money which is just lying around your house without a purpose. All the things which you haven’t used in a long time is a great source of income that you can pour into your savings account or use to plan a holiday.
#7. Don’t Buy if You Can Rent or Borrow
The last tip on how to manage your money list works wonders for finance managing as well as for a frugal and happy lifestyle. Why spend money if the items on your wish list can be borrowed or rented? Nowadays you can rent almost anything, from Halloween costumes to wedding dresses to party equipment like a DJ set to patio furniture for a gathering.
When it comes to borrowing, you can make a deal with your closest friends and swap books, games, and even clothes. Do you want some free things as well? You are in luck because the wonder that is the internet has allowed for the creation of particular groups and websites where people simply put things up for the taking. The biggest items are furniture pieces, which are completely free. Find one in your area and visit it if you want to redecorate your living room with absolutely no expenses charged.
When you first think of ideas on how to manage your money better, it may seem like a daunting task. However, as our article goes to prove, with just a touch of creativity and a lot of willpower, you can accomplish amazing things in this regard.
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