Sometimes managing your money can seem very complicated. To manage money wisely, you have to learn simplify the process so you can keep your financial situation straight and easily understandable.
But you don’t have to be a financial genius to keep your money organized and making sense.
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10 Tips to Manage Your Money Wisely
Usually, the biggest complications that keep you disorganized financially arise from not doing a few simple things. When you fail to do some or all of these things, it’s easy for your finances to descend into chaos and start causing serious problems in your life.
So here are six things you can do to start simplifying how you approach managing your money and learn to more easily keep it under control:
Track Your Spending
Start writing down every penny you spend for 30 days. Once you do that you start getting the feel for what you’re spending on everything, then you can begin a monthly budget. I know a budget may sound complicated, but if you do it religiously it saves you a lot of time and money in the long run. It may seem a little difficult to manage at first, but it gets much easier the more you do it.
I wrote the book on how to make a budget that works. It's fun to read & easy to understand! Find out more here
Once you start doing a budget every month, stick with it. I've seen so many people over the years that started using a monthly plan for their money, did well for a while, but eventually got out of the habit.
That's when their finances went south
Consistency is the key to being successful at anything, including managing your money wisely. I know it sounds boring, but when you do it month after month, year after year, for the rest of your life, your bank accounts will thank you!
If You’re Married, Combine Your Finances
If you’re married, there shouldn’t be “His” money and “Her” money or “His” bills and “Her” bills. All of it belongs to both of you, as we say here in the South, It’s yall’s money. So always deposit all of the money into one central checking account and distribute it from there. Doing that fosters good communication and, along with a budget agreed on by both of you, will eliminate money fights.
Make Savings Automatic
For some people, saving money is hard. Usually, it's because they try to put money into savings out of what they have left after paying bills and spending money on everything else.
A better way to manage saving money is to pay yourself first. Decide on a percentage of your income you want to put into savings, and do that first before you pay anyone else.
You can have the money automatically deducted from your checking account or paycheck every month and sent directly to savings. The more you can automate it, the better. That way it's done for you and you don't have to think about it.
Make a “Bills” Calendar
If you have trouble staying organized with paying bills, make a “bills” calendar showing when each bill is due. Review it once a week and pay the bills due for that week.
Build an Emergency Fund
When you have money set aside for emergencies, you’re not tempted to go into credit card or other debt to deal with it. Everybody has the occasional emergency, and if you are already prepared when it comes, that’s one less thing you will have to worry about in a time of crisis, and you won’t have to spend months or years paying it off.
Goes along with doing a monthly budget. Once your budget is done, put cash in envelopes for each spending category and spend only cash, only out of those envelopes. This simplifies things because you have a set plan to spend only so much, so you don’t end up spending more than you make.
Sell Your Crap
Most of us have too much junk that we don’t need, don’t use, and just takes up space. If you never, or rarely ever use it, then sell it, donate it, or give it to someone that can use it. Those things don’t add value to your life and don’t bring you any joy. All they do is take up space and drag you down. So get rid of the junk and pass it along to someone that can enjoy it.
Stop Taking on Debt
Lots of debt, especially credit card debt, is a sign you're not doing a good job managing your finances. When you manage your money wisely, you don't have to use debt to finance your life.
Once my wife Angie and I started keeping better track of our finances, we learned we never have to use debt, ever again. Since then we've:
- Paid cash for 12 years of college
- Paid cash for 6 cars
- Given away 2 cars
- Eliminated all consumer debt
- Paid cash for our daughter's wedding
- Paid cash for every vacation
- Completely eliminated credit cards from our lives
- Paid cash for every Christmas
- and a lot more…
Know Your Net Worth
Think that knowing your net worth is just for rich people? Think again.
You don't need to hire a fancy financial advisor to calculate it for you. Keeping up with your net worth number is a simple way to understand your financial situation on the most basic level. Even if you have a negative net worth, it's valuable information to know.
Think about it. Every time you take on debt, your net worth goes down. Every time you save money or pay down debt, your net worth goes up. When you consistently keep track of your number, you can see your financial progress (or lack thereof) on a regular basis. This info will help you make better financial decisions and hopefully inspire you to save more money and pay off debt quickly.
Personal Capital is the best way I've found to automatically keep track of your Net Worth. You can check it out here.
Managing Money Doesn't Have to Be Complicated
Managing your money doesn’t have to be complicated, but it does take diligence and attention to what you’re doing. Finding any way you can to simplify and streamline how you do it will always pay dividends. It cuts out lots of time and effort you can better spend doing something much more enjoyable.
My latest course The Divine Art of Money- 21 Days to Manage Your Money Like a Pro! can show you how to easily get total control over your finances. Click here to check it out.
Question: What have you done to simplify or streamline your finances?
Leave a comment and tell me about it.