Personal Money Management

Need Help Managing Money?

You’re able to learn a lot at school – a trade, a career – but rarely are you taught the skills you need to live the life that you want. Managing money is one of those things that are integral to a happy life. That’s much different than saying that money is integral. You’d be surprised how much more bang for your buck you would get by managing money, besides just wishing for more. And acquiring the skills you need for managing money isn’t something that you were born with. It’s a skill just like reading or driving. Here are some tips and guidelines that will help you start managing money.

The first step to managing money is understanding your money. You need to keep a close record of everything you spend. It’s easy to have $40 in cash on Monday, spend it all by Thursday and not know where any of it went. Writing down your purchases and keeping track will help you understand where you money goes.

Once you know where your money goes, you can assess whether it’s going in the right places. This is called prioritizing and you do it all the time, as in the case of time-management. Managing money is no different. Just like there are only so many hours in the day, there are only so many dollars in your paychecks. Once you have a range of priorities, you can see whether your spending habits reflect it. Perhaps the 10th priority is eating out, but it is the 4th largest spending area. This is an inconsistency that needs to be fixed. Managing money is about choices, choices you really have to make, but they aren’t that hard – they’re pretty self evident.

One thing people never seem to know when it comes to managing money are the various rules of thumb. Most financial planners agree that the amount you spend on housing costs, such as a mortgage or rent, taxes and utilities, should be roughly 30 to 40 percent of your income. Likewise, you should, and you may have heard about this before,  immediately put 10 percent of your income into a savings account. Investment monies come right after that, except that no money should be invested or usedawith other debts, such as loans or credit card debt, still outstanding. The money you lose on interest alone is much more than you’ll see in a return on your investment. Those are just some simple rules of thumb to help when it comes to managing money.

Managing money is a skill, not a talent. You’re not born with or without it. Like any other skill it has to be learned and learning takes time. Don’t get discouraged if you don’t see results right away. Keep with it and you’ll be managing money and living the life without so much stress about money problems in no time.

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