6 Ways to Manage Money
Understanding and managing money is a vital life skill, whether you’ve got it by the bucket-load or you’re on a tight budget. We’ve rounded up six sound tips for managing money that work whether you’re just starting out or simply looking for ways to get better.
1/ Create a Budget
With a written budget, you can see where every penny is going and work out ways to juggle, trim or expand savings. You can use pen and paper or an app on your phone to help you keep track of income and expenses, including things like rent or mortgage, utilities, loan repayments or credit cards as well as variable expenses like groceries, fuel for the car or entertainment.
Keep a little notebook with you and write down what you spend daily, including even very small expenses. Once you’ve tracked money for a little while, you’ll spot patterns in your spending and notice where you can make changes if you need to cut out some overspending or rethink your priorities.
2/ Get Professional Advice
If budgeting is troublesome for you, getting some professional money advice can help. They will help you figure things out in line with your personal circumstances, whether you trying to manage debts or make wiser investments.
Professional advice doesn’t start and end with finances, though. If you feel like you’re in a career rut or want to boost your future earning potential, a career advisor could help you navigate the opportunities. It might be possible to study online for instance, if you need additional qualifications but have family or personal commitments to work around. Many colleges offer online courses and, if you enjoy numbers, you can even study accounting online.
3/ Pay Debts Off First
Repaying debts every month can really eat into your cash, keeping you in a never-ending cycle of not having quite enough money. To break the cycle, put the priority on getting any debts right down, or preferably gone.
One way of dealing with more than one debt is to focus on paying them off one by one, starting with the smallest. Throw any cash that’s not earmarked for a different bill at that first debt to get it paid off as soon as possible. Once that first debt is paid, add that payment to the amount you pay to the second smallest debt so that one is overpaid too until it’s gone. It’s called the snowball method. A debt-free future is a strong incentive to tackle debts one by one.
4/ Build an Emergency Fund
If you can, set aside a portion of your income as a rainy-day pot. Have a separate bank account for it so you’re less tempted to dip into it for treats or random purchases. Once you’ve built up a bit of a fund, it’s a great comfort to know you can deal with the odd emergency without having to rely on credit cards or personal loans.
5/ Avoid Impulse Buying
Teach yourself to differentiate between needs and wants. It’s very easy to let those lines become blurred if you feel like you really need a treat when life gets stressful. The idea of ‘retail therapy’ has become a bit of a meme, and it’s not all bad. But too much can put stress on your budget and in your heart.
Whenever you’re tempted to make an unplanned purchase, have a little chat with yourself. Maybe walk away, knowing you can go back if your personal ‘cooling off’ period leaves you still wanting to buy. It can help with small daily impulses, but is even more important for bigger, expensive things. Give yourself a few days to think it over before jumping in so you don’t end up with buyer’s remorse.
6/ Save for Special Expenses
Even small amounts of savings mount up over time. One totally painless way to save a bit is to set up your bank account with a spare change pot. With this, all your debit card purchases are automatically rounded up to the next whole Euro, with the extras squirrelled away into the spare change pot. Sometimes it might be just one penny. It’s often more but it’s always under a Euro. Don’t look at it every day and you’ll be surprised just how the change adds up.
For more formal savings, shop around for accounts that offer higher interest rates on savings. Look into investment opportunities such as stocks or bonds and pensions if you have a bigger pot. Decide whether you might need access to savings or if you can afford to lock it away for a while. Sometimes you get a better return if you agree to not touch the money for a specified time.
Any of these suggestions might help depending on your personal situation, from changing careers to boost your earnings to finding a better way to use what you already have. It’s never too late to learn something new or find a fresh solution to an old problem.
Note: This is a collaborative post