11 Skills on How to Manage
Your Hard-Earned Cash
Finally, your boss has paid you that long-awaited salary from last month. Your bank account looks okay now, and you just can't wait to go out and have some fun. The weekend comes, and all you plan to do is spend just 10% of your salary and save the rest. But guess what, the weekend ends, and you realize you spent 90% of your paycheck, with just 10% left!
Most of us have found ourselves in a similar situation.
Sometimes, we find it quite difficult to manage money wisely. However, developing this skill is crucial to attaining financial freedom and stability. And the good news is that you can learn how to manage your money well to never squander or misuse it.
Consider the following eleven skills that can help you manage your money like a pro:
1. Track Your Spending
The first step to managing your money wisely is tracking your spending. You need to know more than just how much you spend each month; you also need to track where you spend the money. For example, you can use money management apps to track your spending, such as the MoneyTrack app.
Then, list everything you spend your money on, identifying the priorities and the non-essentials. For example, non-essential areas of spending could include entertainment or even your daily cup of coffee. With this information, you can then plan how to improve your spending.
2. Create a Realistic Budget
When setting up a budget, most people make one big mistake; they create a strict, unrealistic budget. For example, a person may set up a "never eating out" rule while currently having takeout’s most days of the week. Instead, you need to create a realistic budget that accommodates your spending habits and lifestyle.
3. Always Pay Your Bills on Time
Paying all your bills on time is one of the best strategies to manage money wisely. The earlier you pay your bills, the earlier you can start planning your priorities and spending. Also, paying bills on time helps you avoid penalties for late payments. Finally, having an excellent on-time payment history gives you an added advantage if you need to raise your credit score.
4. Start an Investment
A good investment helps you save up cash and generates more money. As a result, you attain financial stability in the long run. And the good thing is that you don't have to invest in big or expensive projects; even small contributions can prove very worthwhile.
For example, using the best stock research tools, you can find affordable stocks that you can invest in for both short-term and long-term benefits. Also, you can invest in 401(k) programs, which almost serve as free money for when you retire.
5. Cancel Any Unnecessary Subscriptions
There are plenty of subscriptions that come with recurring charges. Examples of these include gaming services, video streaming services, dating apps, marketing emails, and gym and fitness subscriptions, just to mention a few. However, while these services require monthly subscriptions, most people rarely use all of them or make the most out of them.
Therefore, you must analyze your lifestyle and determine how you use your paid subscriptions. If there are any subscriptions that you rarely use, cancel these and save the cash that you usually spend on them every month.
6. Schedule Regular Progress Reports
Speaking frankly, you cannot learn how to manage your money wisely in just one day or week; it is an ongoing process. Therefore, to ensure that you are making good progress, regular schedule periods to evaluate your earnings, spending habits, savings, and overall financial situation.
You can conduct progress reports at least once a year. Also, request a copy of your credit report from the Annual Credit Report platform; this copy provides essential data that can help you identify any mistakes that could negatively impact your credit score and loan interest rates.
7. Work with an advisor
The benefits of working with an advisor are numerous. Whether you're looking for help with retirement planning or asset management, a financial advisor will align investment recommendations with your risk tolerance and time horizon. They can also help you monitor your portfolio to ensure it's on track to meet your goals. Additionally, an advisor can help you stay out of trouble by keeping you up to date on events and tax strategies.
8. Don't commit to any new recurring monthly bills
Fixed expenses like utilities are an excellent place to start. Because they are paid on a set date each month, you can better budget your money for them. Plus, it will help you avoid late fees, too. Depending on the provider, your bills may change as well. Consider automatic scheduling payments for these bills to keep you from paying late fees. Water, gas, and electric bills are good recurring monthly bills. While these costs may fluctuate, they are still considered basic living expenses.
9. Separate wants from needs
As you manage your money, one of the most important things you need is to separate your wants from your needs. What do you truly need? Your basic needs and recurring expenses. A car is an excellent example of a need. You should divide the total amount you spend into wants and needs. This way, you can ensure that you are only spending what you truly need.
10. Build Up Your Savings
Unforeseen occurrences happen from time to time. And when this strike, you want to have enough finances to deal with the situation. So you should build up your savings and set up an emergency fund that can save you in these situations.
Otherwise, failing to build up savings can force you to borrow money and pay it back at high-interest rates, negatively impacting your money management strategy. Also, having a general savings account can help you remain financially stable if you lose your job.
11. Save for retirement now
The sooner you start saving for retirement, the better. Your savings compound over time thanks to compound interest, a property of assets that earns interest and then gets reinvested to generate further earnings. The earlier you start saving, the sooner your retirement savings will be fully funded.
Money management skills are essential to building wealth. When done correctly, it can help you increase your capital and raise your standard of living. By developing a cushion of savings and assets, you can improve your lifestyle and provide for your family. You can also use this knowledge to build a future that you can enjoy with your loved ones. Unfortunately, those who do not manage their money well often find themselves in debt. However, those who follow a budget are more likely to avoid financial problems. In addition, proper management of your finances allows you to set goals and understand which ones are worth pursuing.
About the Author
Jane Du is has been digging the internet for 5+ years as a digital marketing specialist. With encouragement from friends, she started freelancing and securing high-quality content placements on top publishers and blogs. In her free time, Jane loves to go hiking with her dog, Rio.