Finances can easily slip out of our control, if we're not paying attention or actively trying to manage our spending. With everything around us being for sale and actively pushing us to buy, it can be difficult to manage your money effectively, or stay on top of your everyday spending. Thankfully, there are some money management tips you can follow in order to make sure that you remain in full control of your finances at all times.
1. Figure Out What You've Got Coming In Vs. What You've Got Going Out
One surefire method of cutting back on your spending and managing your money better is to actually sit down and take a detailed look at how much you make compared to how much you spend. I guarantee that the amount will shock and appall you, and that is all you need to sober up and realise that your financial management is lacking and you need to make a change in your spending habits. Seeing the amount and percentage you are diddling away is unpleasant, but it will motivate you to straighten your finances as soon as possible, in order to take better advantage of your money.
2. Establish NEEDS Vs. WANTS
The biggest problem we are confronted with nowadays is the idea that we "need" every little product, gadget, and service that comes out. The advertising industry is clever and insidious, and it actively works to get inside your head and psychologically manipulate you into thinking that you need to spend money in order to be "normal", to be accepted, to be successful, to be superior, etc.
What you need to do is to work towards overcoming this conditioning and realising that there is a difference between wanting something and actually needing it. Essentials and needs include food, clothing, shelter, transportation, bills, etc.
Outside of these categories, however, most of the things we purchase can be classed as luxuries - drinks, excess clothing, the latest gadgets, junk food, etc. And while indulging once in a while, within limits, is perfectly acceptable and maybe even necessary sometimes, for our emotional well-being, making a lifestyle out of "splurging" and "treating yourself" is not. The Money Advice Service can help you out here with tips!
3. Set Up A Budget
Once you've been able to differentiate between these needs and wants, it will be easier for you to set up a budget. A budget should be a way for you to prioritise your spending, focus on your necessities, and cut out any extra expenses that you just don't need. Money Saving Expert has some excellent advice on budgeting if you need help with setting one up or figuring out what priorities you need to set.
4. Pay Off Debt First
Part of money management is making sure that you stay on top of your debt. Before you can even start thinking about saving, you need to prioritise debt repayment, because otherwise, anything you save is just going to be offset by the interest you end up paying on your debt. Make a plan to aggressively repay what you owe, even if you have to forego saving or need to tighten your belt for the time being. After that, you will be free to do whatever you please and prioritise your financial goals differently. Citizens Advice has the best advice on debt.
5. Work Towards A Financial Goal To Make Saving Easier
If you find it difficult to motivate yourself to actually save money and often find yourself straying and spending unnecessarily, then perhaps what you need is a financial goal. If you want to get serious about saving, then you can't be vague about it; you need a purpose. For example, let's say you're saving for retirement, for a home, and for your kids' university tuition. This gives you a tangible goal and you will be more motivated to keep your eye on the prize and save, rather than squander your money every payday.
All in all, money management does not have to be as difficult as it seems, at first glance. In fact, it can even be quite simple, as long as you know what you are working towards and what your goals are. Hopefully, you will be able to put these tips into practice when you work on managing your own finances and meet your goal of saving, paying off debt, or simply being more balanced in your everyday spending and the way you go about managing your finances.