No matter how old or young you are, and regardless of your financial situation, it is essential to learn how to manage your money correctly. Otherwise, you may end up in debt or more serious financial trouble.
Money Management Tips
One helpful way to manage your money efficiently is using a budget. Although the idea of a budget is easy, sticking to it can be much more difficult. The first step is to take an inventory of where you stand now. Do this by making a list of all your assets (cash, savings, investments, etc.) and liabilities (debts, loans, credit cards, etc.). Next, determine your income and how you will meet your expenses and pay down your debt over time. Finally, make a list of your spending and review where you can cut, save, and eliminate expenses that make it harder to meet your monthly obligations. You can do this manually or using a piece of software.
Some other money management tips include:
Make it Easy on Yourself
Find the easiest way possible to manage your money. There are dozens of great mobile apps out there that can help you create a budget, provide alerts before you go over in any expense category, and help you save money. There are also various proven methods to stay on budget and save using the Envelope Method, the 50/20/30 Method, or the Zero-Based Budget. You can explore those methods here.
Accountability
Create an accountability partner to keep you on track. Ideally, this should be your partner, significant other, or a responsible individual actively involved in your financial decisions. As important as a partner is, an accountability system is just as crucial. Click here (find article on accountability system) for some examples of a system that works!
Consider a Loan
Consider taking out a debt consolidation loan at a much lower interest rate than you pay on credit cards, student loans, and car financing. A short-term loan could help you get out from under a mountain of debt more quickly and improve your financial situation. If you have a 401(k) Plan, check to see if loans are available and see if the best idea is to bank with yourself!
Be Smart with Credit
If you look to take out a loan to consolidate debt or open new credit cards to take advantage of introductory low rates, make sure you pull your credit report prior. Make sure you have a good plan to pay off any new debt that is acquired and watch out for any indulgent spending habits. If used properly, credit can be your friend.
Flexibility
As you learn to manage your money, be kind to yourself. Don't be too stern with yourself. Remember to add in some flexibility. Have fun and splurge a little occasionally. Don't turn money into a negative by making your spending habits too restrictive.
Carry it Forward
Be sure to involve your kids in the process and teach them how to create a budget and live within their means while also saving for the future. It's never too early to learn about managing money.
If you need help managing your money, consider a Daily Money Manager to provide assistance and guidance.