It is a common misconception that financial experts are just for the rich and famous. Contrary to popular belief, there are many everyday people who need help with their finances. This blog post will give you some tips on money management that can be done by anyone, regardless of your current income.
1) Make a budget based on your real expenses.
Do not go with the assumption that you can just create a budget based on what other people have as their expenses. Everyone is different and therefore will have different things they spend money on each month. Create your budget from real numbers, even if it means going through old bank statements to get accurate data. This may require some tracking over time in order to figure out exactly how much of an expense is truly necessary for you or your family member’s needs.
2) Use a cash envelope system for your monthly expenses.
If you cannot trust yourself to use your debit card or credit cards responsibly, then do not even think about using them! Using old fashioned envelopes may seem like an inconvenience but it will ensure that you are never in debt by the end of each month because you did not have enough money set aside from the beginning. Keep track of what is inside each envelope and always be aware when they run out so no late payments occur due to mismanagement on your part.
3) Set up an automatic savings plan.
If you have any large expenses that occur on a regular basis, such as monthly installments for a new car or house, set it and forget it! This will help you avoid the temptation to spend all of your paychecks right away so you can save some money without even thinking about it until months later when those pesky bills become due again. It is also important to keep track of what has been saved because if too much time passes before saving reaches its goal amount then interest may be lost along the way which means less cash in hand at the end of the payment month.
4) Avoid credit card debt.
There are many horror stories of people who took advantage of the ease and convenience that comes with using a credit card only to find themselves in financial trouble because they could not pay off their balances each month after making minimum payments for years on end. The best advice is to never use your cards unless you have cash set aside already in an envelope so if something unexpected happens, such as an unplanned car repair or medical bill, you can simply pull out your “emergency fund” and deal with it appropriately (and avoid paying late fees). If this means putting away $20 every week into savings then do it!
5) Create a team approach for money management.
While it is important to be responsible and accountable for your own savings, this does not mean that you should go at it alone! Sit down with your partner or spouse and do some research on how much everyone makes in order to get an accurate picture of what the combined household expenses are each month. If one person’s income fluctuates then so can their budget if they understand how these changes will affect them beforehand instead of being caught off guard by unexpected bills when times get tough financially. This way everyone knows exactly where the money goes every single week without having to worry about surprises because someone forgot to tell their spouse they bought something expensive over the weekend.
Doing all of these things will help you keep your finances in check and avoid any nasty surprises that can come from mismanaging money.