It’s a good idea to get a grip on managing your spending habits even though you might want to run away from having to look closely at your numbers and handling budgets – just the word budget probably makes your eyes glaze over and I bet you’re thinking you’d rather go do some online shopping…
…but you’re not going to because you’re here to empower yourself which means taking charge of your money with a plan which will ultimately help you feel more in control of your life.
ways to manage money
I am not a budgeting guru like Dave Ramsey or Suze Orman but I do have years of practice with managing my family’s money as well as my small business money.
So, here are my some of my best tips:
1. write down new managing money tips
Get a nice-looking notebook. Every time you learn of a new idea and find what resonates with you write it down into your nice notebook.
Physically hand-writing the information is better for you; it slows you down giving your brain time to process the new stuff and helps you to remember it.
You can also use your notebook to brainstorm your own managing money tips.
16 Tips to Manage Money Pin
2. assess your current money situation
This is now when you can write down a list of any problems you are having with managing money – lay it aaaaaall out in your nice notebook and be honest with yourself.
- Are you a compulsive spender?
- Are you just plain too lazy to manage your money?
- Do you keep your bad shopping habits a secret from your loved one?
- What are your worst money problems?
- Are you disorganized?
- Do you procrastinate?
- Think of more.
3. set your new money goals
What do you want to achieve or do better at?
Go down the list you wrote out in step 2 and write down what your improvement needs to be for each one.
For example, let’s say you wrote “I spend too much money eating out”.
Next to that write your goal which could be “I must cook more often”.
In the next step you’ll make the plan on how you are going to achieve your money goals.
4. make a money plan
Now you will write down your ideas for how you are going to achieve your goals.
This list of ideas is part of your plan.
If you don’t know yet how to solve some of your money problems, leave them blank for the moment. Now that you know your trouble spots you can go online later and research ideas to fix those.
Back to our example of cooking more often to avoid eating out; your plan could be to set up a rotating 4-week meal planner with easy recipes and grocery lists. Or, your plan might be as simple as eat out once a week and only say ‘yes’ to one invite a week.
Making a plan will only work if you put it into action!
5. be money accountable
Is there someone close to you that you trust to whom you can tell your money plan and who will make you accountable for your spending habits? Like a relative, a best friend or a life partner? Someone that won’t mind if you get a little mad at them when they say to you “hey, that’s not part of your plan!”. Someone from whom you won't keep your spending habits a secret.
If so, tell them your plan and talk with them regularly and honestly about how you’re going with it. This may help you do better at sticking with your plan.
If there is nobody you can rely on, you could stick big notes up on your walls all over your home to remind yourself of your goals and plans and dreams.
6. Save for emergencies or big purchases
Even if you can only set aside $10 a week - do it - for when emergency situations crop up.
Having access to savings will help you avoid using a credit card or borrowing money, both of which will add to your money burdens because of interest charges and having to pay back the money.
If you can save for big purchases (like a fridge or Christmas presents) rather than getting into debt to purchase them that is always the best plan.
For long terms savings goals look at putting your money into savings bonds.
7. split your money
The best way to manage your money is to split or apportion your income into different bank accounts or cash envelopes.
I’ve never used a cash envelope system, so I’ll use bank accounts for this tip.
Let’s start with a basic 3-way split.
Open 3 bank accounts
- The First Bank Account is your main account for your personal income and for small, irregular expenses like bus fare, medicines, extra bottle of milk, raffle tickets and whatever other little extras always pop up.
- The Second Bank Account is for your regular big bills such as your weekly grocery shop, rent, mortgage, insurances, power, tax payments, phone and internet and whatever other bills you have. Sometimes, you might just have one annual bill payment every year that you need to include.
- The Third Bank Account is for your savings. This will be for emergencies or for big purchases. You could even open this account at a different bank without online access to help restrain your spending out of it.
Some people open about 10 different bank accounts for different kinds of expenses because it works for them to do it this way; if you like this idea then go ahead and do it. You might want one account for fuel, one for utilities, one for insurance, one for groceries…. You get the idea.
For an explanation of the envelope system look at this one by Dave Ramsey.
8. avoid impulse spending
You've probably heard this tip a gazillion times but it's a problem many people have.
Train yourself to spend with thought.
Spending money with thought is about stepping back, looking at your money plan, looking at your bank and cards balances, plugging the cost of your desire into the budget forecast to see if it’s affordable, and making an informed decision. And talking about it with your accountable person.
Or do this instead… if you are shopping online put the object of your desire into the shopping cart and get your thrill from doing that, then exit the web page quickly and go make a cup of coffee or do a happy dance.
This will give you more time to really think about the product about whether it's necessary in your life.
If you really have to, only go back onto the shopping cart the next day. Perhaps by then your desire for that product will have waned or the ‘special’ price it was yesterday will not be so special today.
I have practiced this tactic a few times and found myself at 4am the next morning, when I should be sleeping, feeling so relieved that I didn’t buy that unnecessary thing on impulse and happy that I saved money.
Here are some tips about managing impulse spending from Simple.com.
9. look for cheaper priced products
Spend a little extra time to “shop-around” when looking for something specific that’s in your plan, to find a similar product that’s cheaper. There always seems to be a sale of some sort going on somewhere that will save you money.
10. pay your bills on time
Do this by having a good plan and setting aside money into your bills account regularly. Paying your bills on time will help you receive early payment discounts and avoid late payment charges and prevents the onslaught of debt and worry.
11. try online grocery shopping
I love doing my grocery shop online and then going to collect it after the store person has gathered all the groceries together because I hate grocery shopping.
But what I love even more is that it’s easy to see how much is in my cart as I’m buying the groceries online. If my cart is more than what I have budgeted on my plan, I just reduce quantities or chuck something out or look for a similar cheaper item until the cart comes under budget.
Previously, when I shopped in store, I would lose track of what the $$ were up to if I got distracted, and I often ended up going over budget. Plus, it’s much easier to find specials in the online store.
Here are some online grocery tips by delish.com
12. avoid money debt
Credit card debt is probably the worst problem for most of us. If you are good at paying that debt back it can be good for your credit rating but that debt can get out of control so fast if you are a person of impulse shopping.
Try to save for the item you want to buy rather than being sucked into the “buy now, pay later” merry-go-round.
Or find a cheaper second-hand product that’s similar.
Debt.org have some great tips for avoiding landing in debt.
13. combine your money debts
If you are drowning in high interest debts such as credit cards, consider consolidating them into a loan from a bank or finance company who may be able to provide you a lower interest rate.
It may be possible to combine the debts with your mortgage when it comes time to refinance the mortgage. Mortgages have a much lower interest rate than credit cards, so you’ll save yourself a lot of money.
Another option is finding a credit card promotion with a different organization where they say the interest rate will stay low for six months or a year. Look at transferring your current credit card debt to this new one but keep in mind that any new purchases on this new card will be at a higher interest rate. Also check what the rate will become when the six months is up if you haven’t managed to pay off the original debt by then.
Finally, once you have cleared your current credit card debt cut up the cards into teeny weeny pieces and safely dispose of them - don’t spend on the old cards anymore otherwise you’ll build up even more debt.
The Balance.Com has found the best debt consolidation loans.
14. protect your assets
If you haven’t got insurance for your personal property such as vehicles or furniture, computers and other house-hold contents, consider getting it and factoring it into your regular bills budget.
I’m not the greatest fan of paying insurance but we had to get it when we purchased our first home (home and contents). The one good thing about it is that when we’ve broken something like our TV we’ve been able to put in a claim and get a replacement without paying a cent.
Vehicle insurance: I know that some regions don’t force compulsory vehicle insurance but if you crash into someone can you afford to pay for the repairs to their vehicle, especially if it’s an expensive model, and get yours fixed on top of that? If not, look at getting vehicle insurance. Investopedia have 15 tips to cut down your car insurance costs.
15. use a money managing app
There are a lot of apps available to help you manage your money.
I use the one provided by my bank for my mobile phone. I can see at a glance how much cash is available, they text me when my account has gone below a certain amount set by me, I have quick access to transfer funds between accounts or set up a payment to one of my Payees, plus more.
Here are 11 best money management APPS found by Doughroller.Com
16. do you have a money disorder?
Millions of people suffer from mental health problems from minor issues to major ones which can affect the ability a person has of managing their money well.
If your money behaviors lead to significant consequences you might have a money disorder. Here are a range of problems that can be diagnosed, signs of a money disorder and what help to get.
If you're in the UK, check out the Money and Mental Health Institute.