What should you do with your hard earned cash? There are a lot of options we face on a daily basis that can produce confusion and can guide us in a different direction at any time. There are a lot of things that we should and shouldn’t do with views to our finances and how to manage money. Let’s go through some of the more crucial ways to start saving and put your income where it belongs.
1. Understanding when you should stop
The subject most people face when knowing how to manage money is acknowledging when you should stop. This may be a fairly vague statement but I will help clear that up. Understanding when you should stop can relate to all kinds of different parts of your finances. You should know when to avoid buying things on each day, week or month and that all comes down to a budget. You must realize when to stop investing in each part of your financial portfolio and start in another. You must realize when it is time to stop using the credit card and begin to purchase with real money. These ’stops’ are of essential importance to our financial success and there are many more. Every situation is unique and you need to go through a few of the trouble areas in your financial life to distinguish where you need to stop. It could be you are paying a bit too much for for your telephone and web service. You need to recognize when enough is enough and put an end to cash wasting services or purchases. The amount of money you’ll save if you know when to the draw the line will perplex you.
2. Eliminate Impulse Buys
Most stores rely on urge purchases more than any other item sold. They will attract you in with a great deal on several things in their flyer. You end up taking those items up but while you shop you buy a few other things that weren’t on the list. All of us can be sucked in into the impulse buys when we go to the shopping mall, convenience stores or the food market. Often times we do not know we have made an impulse buy. If you chew gum, have an issue of ‘Cosmo’ magazine on the coffee table or have fuzzed dice dangling from your car mirror it’s probable you have made an impulse buy. We make impulse buys on an nearly daily basis. Those purchases clean out our wallet and savings account of a lot of cash. Here’s an good example of how much you can spend: If you pack of breath mints {every| week you are spending about $80 every year. Throw in one magazine every week, a Starbucks coffee every day, a chocolate bar every few weeks etc. It’s not hard to do the math you will figure out that we spend 1000s of dollars each year on these items that we did not plan on buying. If you avoid them you will easily save 1000s of dollars for your retirement plus you’ll know the fundamentals of how to manage money.
3. Plan Ahead
Planning is key when dealing with your finances. If we go around without putting any thought into where our income is going there is a high likelihood that it will all be spent after a couple of weeks. They key tor solid financial planning is planning in advance.
My Step by Step Advice:
1: Know how much every guaranteed monthly expenses are and put aside that amount from your paycheck. Those items include electricity, cable, car payment etc.
2: Set aside $30 (or more) every week that will go into your emergency funds.
3: Make a budget and then do your weekly grocery shopping. If you have all the food you need, it will keep you from going to the corner store to buy a loaf of bread for $4.
4: Budget no more than 15% of your pay for weekly spending. If you spend that 15% by Monday then you don’t get any more. Do not dip into next weeks budget and do not let last weeks budget roll over into the current week.
5: Make a financial plan at least once a week. If you want to go on a holiday, create a goal to make that dream come true. If you want to buy a house next year, start making that goal happen. If you wish to save an extra $30 a week, figure out a way to make it happen. This will show you how to manage money and get you on the right track to your financial freedom.
Should you go out and spend your money with careless abandon or save wisely? I’m sure you know the answer. Managing money Is not as tough as you think and can be easy to save for the retirement, house or vacation you’ve always wanted. You simply need to understand when enough is enough when it comes to spending. You also need to stop impulse spending. The last thing is effective financial planning. If you make an honest attempt at making those three things happen, you will be close to knowing how to manage money better.Remember,its never too late to start !
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