Money Saving Tips – How to Manage Money

What should you do with your hard earned money? There are many choices we face on a daily basis that can confuse as well as sway us in any given direction at any time. There are many things that we should and should not do when it comes to our finances and how to manage money. Let’s go through a few of the most important ways you can start saving and put your money where it belongs.

1. Know when you should stop

The problem many of us face when knowing how to manage money is knowing when it is time to stop. This may be a somewhat vague statement but I’ll help clear that up. Knowing when to stop can pertain to many different areas of you finances. You should know when to stop spending on a daily, weekly or monthly basis and that all comes down to budgeting. You should know when to stop investing in one part of your financial portfolio and start in another. You should know when to stop using your credit card and start using cash. All of these are vital for our financial success and there are many more. Every situation is unique and you should go through some of the trouble areas in you financial life to discover where you need to stop. It could be you are paying too much for internet or phone service. You need to know when enough is enough and put a stop to money wasting services and purchases. The amount of money you will save if you know when to the draw the line will amaze you.

2. Eliminate Impulse Buys

Retail outlets depend on impulse buys more than any other type of purchase. The store will lure you in with a great deal on a few items in their flyer. You pick those items up but along the way you buy several other things that aren’t on your list. All of us can be sucked into those impulse buys any time we go to the mall, gas station or the grocery store. Most of the time we don’t even realize we’ve made an impulse buy. If you chew gum, have an issue of ‘People’ magazine on the coffee table or have fuzzy dice hanging from your car mirror chances are you have made an impulse buy. We make impulse buys on an almost daily basis. Those purchases can be credited with draining our wallet and bank account of more money than we realize. For example If you chew one package of gum per week you are spending about $78 a year. Add in one magazine a week, a Starbucks coffee a day, a chocolate bar every two weeks etc. It’s not hard to do the math to figure out that we spend thousands of dollars each year on these items we had no intention of buying. If you avoid them you will easily save thousands of dollars for your retirement and you understand the basics of how to manage money.

3. Plan Ahead

Planning is everything when it comes to your finances. If we run around without having put any thought to where our money is going chances are it will all be gone after a couple of weeks. They key to solid financial planning is planning ahead.

My Step by Step Advice:

1st: Know what your guaranteed monthly expenses will be and set aside that amount from your paycheck. Those items include hydro, cable, car payment etc.

2nd: Set aside $25 (or more) per week that will go into your emergency fund.

3rd: Create a meal plan and do your weekly grocery shopping. By having everything you need in the house it will prevent you from going to the corner store to buy a loaf of bread for $4.

4th: Set aside weekly spending budget of no more than 10% of your paycheck. If you spend that 10% by Monday that’s all you get. Don’t tap into next weeks budget and don’t let last weeks budget roll over into this week.

5th: Create a financial goal at least once every week. If you want to go south this March, create a goal to make that dream come true. If you want to buy a house next year, start making that goal happen. If you want to save an extra $10 a week, figure out a way to make it happen. This will show you how to manage money and get you on the right track to your financial freedom.

Should you go out and spend your money with reckless abandon or save wisely? I’m pretty sure you know the answer to that question. Managing money isn’t impossible and you don’t have to be the most frugal person in the world to be able to save for the retirement, home or vacation you’ve always wanted. You simply need to understand when enough is enough when it comes to spending. You also need to stop impulse buys. The final thing is sound financial planning. If you make an honest effort at making those three things happen, you will be on your way to knowing how to manage money wisely.

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