Updated: Jan 7
Money management is about more than just making money and then spending it again. It's about more than just making ends meet. But don't worry if you're not a math genius, we aren't either. All you need to know for better money management is the basics - addition and subtraction. Easy enough right?
If you are living paycheck to paycheck despite earning enough money, there's something wrong. Here are some quick tips to help you improve your financial habits.
1. It all starts with a budget
Budgeting is boring. That's why a lot of people don't even bother with monthly budgets, but it'll save you a lot of trouble in the long run. For example, when you're thinking about buying that pretty, but expensive bag or that fabulous pair of shoes take a moment to actually think about whether you can afford it or not. Just because the money is there, doesn't mean you can use it. Think about bills and expenses that you'll have to pay that month.
2. You gotta use your budget
Now that you've made your monthly budget, don't let it collect dust tucked away in some folder somewhere. Actually use it and refer back to it when making financial decisions. Also update your budget whenever you spend some money, that way you'll get an accurate representation of you financial status.
3. Make a habit out of saving
Like Elizabeth Warren says in her book - All Your Worth: The Ultimate Lifetime Plan - you should dedicate a portion of your monthly income to savings. The basic rule of her '50-20-30 budget rule' is to divide your after-tax income. You spend 50% on what you need, 20% on what you want (like that bag you've been eyeing) and 30% goes to savings.
4. Extreme couponing; home edition
Do you know that tv show where they have tons of folders filled with coupons? Where they go grocery shopping for €300 and only pay about €5 for everything? You're going to do that too, but less extreme. Couponing can actually save you a lot of money if you commit to it. So get your scissors and start cutting out those coupons, your bank account will thank you.
5. Be persistent
Money management isn't an easy thing. Despite all the good intensions, a lot of people fall off the financial bandwagon. Just like dieting, sticking to a budget plan that's too restrictive can be suffocating. Navigating the financial world can be confusing, but don't lose hope. Give yourself time to learn and grow and you'll get there eventually.
Say goodbye to lying awake at night thinking about your money problems and say hello to sleeping like a baby.