Intro: How to Manage Your Money Better | What You Need to Know to Manage Money Wisely
When it comes to managing your money, are you confused about where to start? Are you overwhelmed with debt?
Does the thought of living on a budget paralyze you? Money management is a skill you can learn, and you should learn how to manage money better from the experts – those who have learned the hard way and now teach others what to do and what to avoid regarding the best ways to manage money.
This brief overview will introduce you to experts and ideas as well as software programs, apps, and other digital tools you can use to diversify ways to manage money.
How to Manage Your Money – Where to Begin
If you are asking, “Are there things I can do to learn how to manage my money easily?” the answer is “yes,” but you will need to take a look at where your money is headed daily, monthly, and yearly.
The first item of business you need to attend to with your personal finances is to figure out where all of your money is going. You might feel like you never have enough or are living paycheck to paycheck; however, you may have a few significant “money leaks” you need to identify and fix right away.
Image Source: How to Manage Your Money Better
Dani Johnson is a multi-millionaire business leader that holds monthly First Steps to Success events throughout the country, where she teaches people how to manage money better as well as guidelines for how to pay off debt, start savings accounts, increase income, and grow wealth.
Johnson, who was once homeless, runs several businesses with her husband and only works an estimated 20 hours per week total using her personal ideas and methods which she teaches at her monthly seminars.
Recently, Johnson spoke about how to manage money wisely and answered viewers’ questions, such as “What are ways for how to manage my money and pay off debt?” on her daily television broadcast.
Most Americans tend to spend money on items like fast food, convenience foods, and grocery store items that are not really necessary (or healthy) for them. This can add up to hundreds or thousands of dollars per year being spent on extraneous items. Johnson suggests making a meal plan list before grocery shopping and limiting grocery shopping trips to once a week or less to keep from overspending. This is also one of the easiest ways to manage money.
In addition, she recommends curbing impulse buying by allowing 30 days to consider purchasing an item. After 30 days, the desire and impulsiveness will probably dissipate or disappear completely.
There are other places where your money may be leaking:
- Extra grocery trips for one item that turns into more
- Impulse buys, especially at the register or online
- Daily spending habits like that morning cup of coffee from the barista
- Weekly or daily fast food stops including restaurant delivery
- Vices like smoking, alcohol consumption or gambling
- Clothes shopping when you have too many outfits in your closet
- Subscriptions for magazines or memberships that you no longer need
- Grocery shopping when you still have food in your pantry and refrigerator
- Insurance premiums you accepted without shopping around for better options
Once you figure out where your money is leaking, you can shift that income into other categories, like your bills, paying off your debt, building an emergency fund or savings account, and making travel or vacation plans.
Assigning your money to a budget or financial plan will give you more control over your finances as well as answer your question, “What are ways to manage my money?”
All-in-One Change Management Tools
Top Rated Toolkit for Change Managers.
Get Your Change Management Tool Today...
How to Manage Your Money – Creating a Budget or Financial Plan
By creating a budget or financial plan and stopping impulse buying and extra spending, you will discover more money without increasing your income. By assigning your income to specific categories, you will also nix extra spending.
Dave Ramsey, an entrepreneurial leader, author, radio host, speaker, and teacher, shows you how to create a budget and how to manage your money better. Ramsey lists these facts on his website for consumers:
- As many as 68 percent of Americans do not budget each month.
- The American population spends 40 percent of their food budget on eating out.
- Americans spend as much as 34 percent of their income on housing costs.
Ramsey stresses that creating a budget is not a prison without freedom; you simply create a budget that includes some fun items, like clothes shopping and vacation, as well as starting a debt paying plan. After only three months of budgeting, as many as 84 percent of people felt more in control of their money, with a better focus on learning how to manage money better, as well as improved self-discipline, while enjoying peace of mind.
So, what steps do you take to create a budget and learn how to manage your money better? You can find the Monthly Cash Flow Plan and Irregular Income Budget worksheets on Dave Ramsey’s website. Ramsey suggests the following budgeting planning steps:
1. List all of your total income. Make a list with pen or pencil and paper of all of your income sources, including your spouse’s take-home pay, freelance pay, Social Security checks, part-time jobs, and rental income.
2. Make a list of all of your expenses. Include all of your utility bills, mortgage or rent, and irregular bills, like trash or insurance. After you add up the necessary bills, then make a list of your expenses, like groceries, gasoline, and entertainment.
3. Next, subtract all of your expenses from your total income to equal zero. Ramsey advises using a zero-based budget so that you assign every dollar to a category. This will help you prevent your income from leaking out and leaving you baffled over where your money is going. A zero-based budget is one of the most efficient ways to manage money.
4. Track all of your expenses throughout the month to stay on track. Every time you spend money, whether it is to pay a bill, fill up the gas tank or grocery shop, track the expense either on paper or by using a digital tool or software program.
How to Manage My Money Using Digital Tools, Apps, and Software Programs
There are several ways to manage money and track expenses after you’ve created your budget or financial plan. These can include tracking on paper, using worksheets, tracking with an app on your smartphone or using a software or interactive program on your computer to set financial goals, pay off debt, and begin saving and investing. As mentioned earlier, you can download worksheets to get started or create your own spreadsheets using Excel.
Consider some of the following study-course programs, software programs, interactive websites, and apps to learn how to how to manage money wisely.
Image Source: Managing Your Money Better
Dani Johnson’s War on Debt: This program breaks down your debt habit and helps you create a budget using the workbook, videos, and audios that are included to teach you how to manage your money better. Thousands of people have used the program to annihilate debt and stop overspending by assigning their income to specific categories and creating a “fun budget” to use as a reward system for sticking to their financial goals.
Dave Ramsey’s Financial Peace University DVD Home Study: According to Ramsey, the average family pays off $5,300 in debt within the first 90 days of using the DVD program. The program consists of nine DVDs, a workbook, Ramsey’s envelope system (separating your categories into envelopes so you have a visual), and budget forms. You will learn how to manage your money using the Snowball Debt system as well as creating a $1,000 emergency fund.
YNAB (You Need a Budget): If you are looking for a budgeting app to help you track your expenses and stick to your financial goals, the YNAB app is available on the web as well as on Android and iOS devices. The app will help you assign every dollar to a category, and if you overspend in one category, it will help you cover the additional expenses by withdrawing from your fun budget. The company also has an “Age Your Money” feature to help you work towards spending money that was earned more than 30 days prior.
Quicken: The software program syncs to your financial institutions so you can easily see where your money is going and make sure you are sticking to your budget. The program is one of the best ways to manage money as it provides you with an easy-to-read visual with graphs and charts while using a 256-bit encryption for security. You can also check your balance, manage your account, and track your spending anywhere and on any device.
Mint: The program is free to use, and all data is encrypted for security. Mint is made available from the makers of Quicken and Turbo Tax and, unlike other budgeting apps, can provide you with a free credit score. Once you link your financial institutions to Mint, the program breaks down your spending and can help you create a budget that includes your investment accounts. The website personalizes itself to your needs to provide you with a solution to the often asked question, “What are ways for how to manage my money?”
Good Budget: This software program works similarly to the envelope system but is maintained in the cloud and syncs with other devices, so you and your spouse can learn how to manage money wisely while working together. The software program takes it one step further from just tracking your expenses to actually planning your spending. You can create virtual envelopes for each expense as well as plan for annual events, like holiday shopping and vacations.
EveryDollar.com: This budgeting website is free to use and is accessible from your computer or Android or iOS device so you always have your information at your fingertips. The question, “How do I manage my money on the go?” is easily answered with this budget software which allows you to create your first budget in only 10 minutes. The site also offers a guide and other educational information to teach you about budgeting tips, basics, emergency funds, saving money, paying off debt, grocery store savings, and more.
Popular Article: Tips on How to Build Wealth (Steps, Ways & Habits of Wealthy People)
How to Manage Money Better – Building an Emergency Fund While Managing My Money
Dave Ramsey suggests that before you begin paying off your debt, you should consider creating an emergency fund of $1,000. This fund is one of the best ways to manage money and avoid going deeper into debt in the event of an emergency. Ramsey lists nine of the best ways to manage money to build an emergency fund as quickly as possible.
- Earn more from a second job
- Sell items you no longer need or want
- Limit your restaurant and fast food trips
- Give up smoking, gambling, and other vices
- Cancel your cable subscription
- Carpool more often to work and other activities and meetings
- Visit thrift stores and consignment shops
- Save your spare change
- Think of other creative ways to earn and save more money
Use your savings to fund your emergency account as quickly as you can before beginning a debt pay-off plan. Read and study from experts on how to manage your money and apply what you learn. Learning how to manage money wisely is a lifelong skill that will eventually lead you to a life of financial freedom.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.