Any day is an opportunity to look at how you manage your money and make changes. How you save, spend, and budget matters. No money management is perfect in perpetuity, so it's healthy to periodically evaluate how you're working out your plan.
Money management may not seem easy, but there are always ways to improve. Have hope. Don't go hopeless. Be honest with yourself about where you're at and have realistic hope for future improvements.
Improving your finances is a process that takes one step at a time, requiring time. Luckily for everyone, there is always a way to improve and get somewhere better when spending, saving, investing, and paying down debt.
Here are the best money management tips.
Write Out a Budget
Write out what you're spending every month on what. Look at your monthly budget. Evaluate where money could have been saved or spent differently.
Look at Your Income
If you're unhappy with your money and want to earn more, look at realistic ways. It may involve retraining or education. It may involve taking a second job temporarily.
Talk to an Expert
After you are on the right path, have some money, and need to move from effective money management to wealth management and growth, now is the time. If you haven't already, talk with a financial expert, such as a family office, about how to best maintain and grow your funds.
Talk to a Tax Expert
The more money you have, and as you start to do things with it, the more you may be hit with unexpected taxes. Discuss this with a tax expert to ensure you aren't overpaying your tax bill. Adjust your finances to minimize taxes.
Cancel Unnecessary Expenses
You may have subscriptions and memberships you don't need, services you're registered for that you don't use, and other things that can be cut from your monthly budget. Just like you want to raise income, you want to lower expenses simultaneously.
Learn to Invest
Speak with a family office or financial advisor to learn more about growing your money. When you invest, money management incorporates a growth strategy. Your investment strategy will tie directly to your financial goals.
Define Risk Tolerance
Risk guides your investment. The wrong risks in an uncertain economy or volatile market can equal losses. Evaluate your investment approach and ensure you adopt the right portfolio approach to managing risk.
Try Brief Periods of Restriction
If you struggle to make certain savings goals work, try brief periods of restriction, such as a no-spend month where you focus exclusively on your needs. Restrict, restrict, and restrict. After thirty days, you can return to your regular budget parameters.
Manage Your Real Estate
For any real estate you own, consider whether now's the time to restructure or refinance your mortgage. You may be able to nab a better interest rate or better terms, saving you tons of money in the years ahead.
Have Short-Term and Long-Term Goals
Any financial advisor or family office will tell you to make short-term and long-term goals. Common goals include buying a house, saving for education, or planning for retirement. Set goals. Have deadlines. Calculate what you can realistically put towards each goal monthly.
Use Money Management Tools
Some apps and software will help you budget and manage your finances. Use them! See real-time insights into how your money is spent, track expenses, and receive personalized recommendations on optimizing your financial health.
Pay Off Major Debts
Mortgages, credit cards, student loans, car payments, and high-interest debts should be paid off. Have a plan. There are dozens of debt repayment plans – such as debt snowball, debt avalanche, or debt consolidation – that you can use. Still, ultimately, this is a major focus for anyone trying to regain control of their finances.
Create Separate Savings Accounts
Have separate savings accounts for different goals. Budgeting and putting money into your savings creates an easy separation between what's put in and where. Highlight how well you are doing with your savings objectives.
Have an Emergency Fund
You will be hit with unexpected expenses. It could be hundreds of thousands. Have an emergency fund ready to draw from. The rule of thumb is 3-6 months of your living expenses. You have somewhere to draw from if you lose your job or your car breaks down.
Save Money with Each Paycheque
Set up a direct deposit to automatically take an amount and put it into your savings account with every paycheck. This way, you don't even need to think about it. Less temptation to not do it and spend it elsewhere.
