10 Simple Ways to Manage Your Money

Better
Being good with money is about more than just making ends meet. Don't worry that
you're not a math whiz; great math skills aren't really necessary - you just need to know
basic addition and subtraction.

Life is much easier when you have good financial skills. How you spend your money
impacts your credit score and the amount of debt you end up carrying. If you’re
struggling with money management issues such a living paycheck to paycheck despite
making more than enough money, then here are some tips to improve your financial
habits.

When you’re faced with a spending decision, especially a large purchase decision, don’t
just assume you can afford something. Confirm that you can actually afford it and that
you haven’t already committed those funds to another expense.

That means using your budget and the balance in your checking and savings accounts
to decide whether you can afford a purchase. Remember that just because the money
is there doesn't mean you can make the purchase. You have also to consider the bills
and expenses you'll have to pay before your next payday.

How To Manage Your Money Better

1. Have a budget: Many people don’t budget because they don’t want to go
through what they think will be a boring process of listing out expenses, adding
up numbers, and making sure everything lines up. If you’re bad with money, you
don’t have room for excuses with budgeting. If all it takes to get your spending on
track is a few hours working a budget each month, why wouldn’t you do it?
Instead of focusing on the process of creating a budget, focus on the value that
budgeting will bring to your life.1
2. Use the budget: Your budget is useless if you make it then let it collect dust in a
folder tucked away in your bookshelf or file cabinet. Refer to it often throughout
 the month to help guide your spending decisions. Update it as you pay bills and
spend on other monthly expenses. At any given time during the month, you
should have an idea of how much money you’re able to spend, considering any
expenses you have left to pay.2
3. Give yourself a limit for unbudgeted spending: A critical part of your budget is
the net income or the amount of money left after you subtract your expenses
from your income. If you have any money left over, you can use it for fun and
entertainment, but only up to a certain amount. You can’t go crazy with this
money, especially if it’s not a lot and it has to last the entire month. Before you
make any big purchases, make sure it won’t interfere with anything else you have
planned.3
4. Track your spending: Small purchases here and there add up quickly, and
before you know it, you’ve overspent your budget. Start tracking your spending to
discover places where you may be unknowingly overspending. Save your
receipts and write your purchases in a spending journal, categorizing them so
you can identify areas where you have a hard time keeping your spending in
check.4
5. Don’t commit to any new recurring monthly bills: Just because your income
and credit qualify you for a certain loan, doesn’t mean you should take it. Many
people naively think the bank wouldn’t approve them for a credit card or loan they
can’t afford. The bank only knows your income, as you’ve reported, and the debt
obligations included on your credit report, not any other obligations that could
prevent you from making your payments on time. It’s up to you to decide whether
a monthly payment is affordable based on your income and other monthly
obligations.5
6. Make sure you’re paying the best prices: You can make the most of your
money comparison shopping, ensuring that you’re paying the lowest prices for
products and services. Look for discounts, coupons, and cheaper alternatives
whenever you can.
7. Save up for big purchases: The ability to delay gratification will go a long way in
helping you be better with money. When you put off large purchases, rather than
sacrificing more important essentials or putting the purchase on a credit card,
 you give yourself time to evaluate whether the purchase is necessary and even
more time to compare prices. By saving up rather than using credit, you avoid
paying interest on the purchase.6  And if you save rather than skipping bills or
obligations, well, you don’t have to deal with the many consequences of missing
those bills.
8. Limit your credit card purchases: Credit cards are a bad spender's worst
enemy. When you run out of cash, you simply turn to your credit cards without
considering whether you can afford to pay the balance. Resist the urge to use
your credit cards for purchases you can’t afford, especially on items you don’t
really need.7
9. Contribute to savings regularly: Depositing money into a savings account each
month can help you build healthy financial habits. You can even set it up so the
money is automatically transferred from your checking account to your savings
account. That way, you don’t have to remember to make the transfer. 8
10. Being good with money takes practice: In the beginning, you may not be used
to planning ahead and putting off purchases until you can afford them. The more
you make these habits part of your daily life, the easier it is to manage your
money, and the better off your finances will be.

Frequently Asked Questions (FAQs)

Why is money management important?
Without money management, personal finances are a bit of a mystery. This can lead to
overspending and living paycheck-to-paycheck. Money management can help you have
a better handle on your income and spending so you can make decisions that improve
your financial status.

How do you improve money management?

You can improve your money management by regularly evaluating what you're doing
with money and making changes that make sense for you. For example, if you don't
have a budget, you could start by developing one. If you have a budget, you could track
your spending and see how it lines up with your budget. Once you have an idea of your
income and spending, you could choose to increase your savings, pay off debt, or start
investing based on your financial goals.