Knowing how to manage money is more than making ends meet. Don't worry that you are not a mathematician; excellent math skills are not really needed. You just need to know the basics of addition and subtraction.
If you are not in control of your money, living paycheck to paycheck, despite making more than enough money, here are some tips to improve your financial habits.
1. Take an inventory of your finances
Money management is more than just math. It is also about tuning your thinking. As you begin to take control of your finances, you will change your philosophy in the same way you change your daily habits.
Take a mental inventory of your current position.
Be honest with yourself about where your weaknesses lie. You may have made a few mistakes in the past, but you don't need to follow this path.
2. Plan your budget
A lot of people don't budget because they don't want to go through what they think would be the boring process of listing expenses, summing up and making sure everything is lined up. If you are bad with money, you have no room for excuses for not keeping a budget. If all it takes to keep your spending on track is a few hours a month to budget, why not do it?
3. Stick to budget
Your budget planning is useless if you do it and then let it collect dust in a folder tucked away in your bookshelf or filing cabinet. Refer to him frequently throughout the month to determine your spending decisions. Update as you pay bills and other monthly expenses. At any time during the month, you should have an idea of how much money you can spend, considering all your remaining expenses.
4. Track your expenses
Small purchases here and there add up quickly, and before you know it, you're spending too much money. Start tracking your spending to find places where you might unknowingly overspend. Save your receipts and record purchases in an expense journal, categorizing them so you can identify areas where you struggle to control your spending.
5. Don't settle for any new monthly bills
Just because your income qualifies you for a particular loan does not mean you should take it. Many naively believe that the bank will not approve them for a credit card or loan that they cannot afford. The bank knows only your income and debt obligations included in your credit history, and not any other obligations that may prevent you from making payments on time.
It is up to you, not the bank, whether the monthly payment is affordable based on your income and other monthly obligations.
6. Make sure you pay the best price
You can make the most of your shopping by comparing purchase prices, ensuring that you pay the lowest prices for goods and services. Look for discounts, coupons, and cheaper alternatives whenever possible.
7. Limit your credit card purchases
When you run out of cash, you simply go to your credit cards without thinking about whether you can afford to pay the balance. Resist the urge to use your credit cards for purchases that you cannot afford, especially for items you don't need.
8. Contribute to savings regularly
Depositing money into a savings account each month can help you develop healthy financial habits. You can even set it up to automatically transfer money from your checking account to your savings account. This way, you don't have to remember every month to make a translation.
9. Make savings a habit
Money management goes beyond spending less than you earn. The real hallmark of financial prowess is the savings that are sufficient for a comfortable life in both the long and short term.
You can achieve this in four steps: save, invest, pay off, repeat.
10. Be persistent
Despite their good intentions, many people quit money management. Sticking to an overly restrictive budget can be stifling. But don't be discouraged.
You have not reached the financial position that you are in overnight, and you will not get out of it overnight. Give yourself time to learn and grow. With hard work and dedication, you will learn how to manage money with confidence.