Managing your money is something we all know we should do, but the problem is we don’t. It’s really not that much fun to be on a daily budget, and it’s really easy to rack-up a high credit card bill if you don’t monitor your expenditures daily. We will provide you with three tips that will help you mange your money and hopefully not crimp your routine to much.
Needs versus Wants
Why manage your money in the first place? Is it to save more? Do your expenses exceed your income? Do you want more control? To achieve your financial goal you need to know where your finances stand, and to do this you have to make a list of needs and wants. The best way to do this is to list your expenditures daily. Once you log a few weeks of what you actually need to spend daily and what you spend on extras (wants), then you’ll have a better picture of your spending habits. Now you have a starting point to make adjustments from – this will greatly help with your daily money management plan.
The Dreaded Word “Budget”
This is the last thing people want to talk about, because the word “budget” seems to relate to “restrictions,” and who likes that. So if you don’t like that word, then lets call it “daily allocation,” is this better? To incorporate a successful money management plan you must have a daily spending limit. Of course emergencies happen, and as part of your plan it would be a good idea to have an emergency fund set to the side.
Tracking Your Spending
Using debit cards, with the Visa credit card feature, is very common these days. We would suggest having two accounts: one for your personal use and one for your daily expenditures. The reason for this is fraud. With the luxury of electronic banking comes the increase in fraud; you limit your risk if you only expose one account to the outside world. Plus you will only be keeping a few hundred dollars in your daily use checking account, so the risk limit is low.
Setting up a system like this makes it much easier to monitor your daily spending activities. If you’re lucky enough to have a bank that categorizes expenditures, then better yet.
Most people have little to no idea of where they spend their money. Following the three simple tips above will start you on a path to controlling your finances. If you manage your money daily, then your long term goals will come true – promise.