Money- you can’t live without it and when you have it, there are problems too. If you’re one of those people where you live paycheck to paycheck and wonder how others don’t face the same, then this post is for you. In this post we’ll be covering money management basics. If you don’t want to be living hand to mouth then continue reading. The secret of many people doing well is not their higher paycheck necessarily but their money management skills. But it’s not only their skills that take them far it’s also a strict disciplinary approach that sets their affairs right too. But not to worry you don’t need to possess any hi- fi knowledge to be able to manage your money effectively. It’s actually quite simple. So without further ado let’s take a look at some money management basics.
Some Money Management Basics:
Live according to your means:
The first and foremost thing to remember in money management basics is spend within your means. If you’re one of those people who spend all their earnings or are even left with a negative balance you aren’t far behind the majority of Americans. Hey it’s not me saying these things but a study conducted by FINRA Investor shows this.
Anyway, if you fall in this category, it’s not late to start living within your means. This means cutting unnecessary expenses.
Know what you Spend - Money Management Basics:
This is kind of like budgeting. Budgeting is basically knowing what you have coming in and what you have going out.
When it comes to income, we pretty much have an idea on what comes in but we’re less sure of what goes out. You can check what goes out by looking at your monthly bills or bank statements.
After doing this break down your expenses into the following:
- Living expenses- this is what you have to pay each month like rent, insurance, car loans and other EMIs
- Essentials- these are things you have to spend to live such as electricity costs, gas, groceries etc.
- Other expenses- these are basically your non- essentials
Pay your Bills on time:
The next most important tip in effective money management basics is to pay all your bills on time. This is something that you will be able to do if you have a positive balance on hand. To get that positive balance you have to avoid all non- essential purchases.
If you don’t have the dough to pay your bills on time, then prioritize what you pay first. What you pay first is what costs the most. This means those loans that have a higher interest rate or those debts that you need to pay ASAP. You need to balance out higher costs with those that absolutely need paying.
Once you do this take steps in paying off your debt. Sure it will take time but in the end you would have paid off everything and may have something leftover which you can save.
In the end follow this course with a strict approach and hopefully in no time, all will be well!
