Managing Your Money – How the “Smart Guys” Budget!
The importance of proper money management
When it comes to the money you earn, there are so many choices that can be made when spending it. The instability of today’s economy has made it necessary for many of us to be a lot more disciplined and wiser in the area of managing your budget and spending. Not managing your money properly and not living within your means while you are still earning a living could have dire financial consequences later in life. Your golden years could be tarnished at best if you are not managing your money wisely prior to retirement.
5 tips for managing your money wisely
There are a number of ways that you can begin managing your money effectively and preparing for the future. The following 5 tips should be considered where this is concerned:
Tip #1: Start by preparing a budget – this is the first and most critical step to take in order to start managing your money better. Knowing exactly the amount of money that is coming in and going out every month is the basic reason behind preparing a budget. If you want to start living within your means, you need to complete this step before going any further.
Tip #2: List all of your regular monthly expenses – this includes tracking every penny that you spend on your auto, food, home, maintenance of your home, and monthly utilities. Additional considerations include clothing, dry cleaning, credit card payments, entertainment, insurance, loan payments, savings, taxes, and any other type of expense and/or payout.
Tip #3: List your income – regardless of the source (i.e. paychecks, tax refunds, investment income, etc.), keep track of every penny you earn.
Tip #4: Subtract your total expenses from your total income – this will give you an overall picture of what money is coming in and where your money is going when covering your expenses. It will also give you a better idea of how you could improve relative to living within your means.
Tip #5: Are your expenses covered? When you are preparing a budget, this is the first thing that you will realize once you have followed all of the steps above. If your expenses are covered, you’re doing a good job. If they aren’t, you have a couple of decisions to make. Either you need to earn more money or be spending less.
Additional suggestions and warnings
When preparing your budget, be realistic but remember that the most important goal is living within your means and preparing for the future. Once you create your budget, stick to it religiously.
Balance all of your bank statements right down to the penny.
Resist the temptation to spend compulsively if you find that this is an issue. Try to find ways to curtail unnecessary spending such as preparing your lunch for work rather than buying it. Additionally, try to carpool with fellow employees whenever possible.
If you find that there are numerous items in the house or stored in your garage and you know that you will never need or use these, have a yard sale and then save the money you earn.
Consider starting up a home-based business that doesn’t require a major investment to get it started. Start saving all of your change. You will be amazed at how much builds up when you just throw it in a jar and forget about it.