How to Manage Your Money
When people hear the words “money management”, their eyes glaze over and roll to the back of their head. There is little in this world less “sexy” and exciting than proper money management and learning how to manage your money.
At the same time, there are few skills more important in the 21st century than learning how to manage your household budget. If you do a poor job managing your money, the rest of your life is affected. A little nerdiness now and again can prevent a future of financial problems and stress.
So buck up and learn how to manage your money. It may not be as interesting as the bar, but one night a week dedicated to proper money management can’t be all that much to ask.
These five easy steps can be done a little bit at a time and will lead you to the financial promised land: good money management skills. Believe me; having money is sexy.
1. Save Your Money
No matter how little “extra money” you have at the end of a pay period, and no matter how much debt you are working to pay off, you must set something aside with every paycheck. I started saving my money twenty bucks at a time. I am now saving many times that every month, but I had to start somewhere.
If you aren’t saving your money, you aren’t preparing for eventualities that could sink you with haste.
What happens if you get injured and need an expensive procedure as well as time off from work? What if your job peters out and you need a bit of cash to survive on until your next gig?
Saving money is the antidote to all negative financial possibilities.
If you have trouble saving money, talk to your bank and see if they can auto-draft a certain amount of your paycheck for you directly into a savings account. Your bankers are there to help, and believe it or not they actually want you to save money. Its better for them and for their customer: you.
2. Balance your Checkbook
Even if you don’t write a ton of checks, learn to use a check ledger to track your checking account and debit card expenses. Depending on your bank’s electronic automatic system for keeping your balances straight is a dangerous road to go. Sometimes the bank isn’t as up to date as you think and this leads to overdrafts and other poor decisions.
3. Make (and Follow) A Budget
This is as important as any other step — set a budget for yourself and make yourself stick to it. If you know you only have xxx amount of money for groceries every week, stick to that number.
Budgeting will also help you save money. Keeping a budget will help in every other area of our mini money management lesson as well. Budgeting means you’ll know how much money you can spend on a date night, for instance, and you won’t have to worry about the waiter returning with your debit card declined.
4. Read and Understand Your Credit Report
Your credit score is your gateway to financial good times. A good credit rating determines your ability to take out lines of credit and influences decisions about your interest rate. Looking at your credit score multiple times a year (and meeting with a financial advisor to go over it so you understand it) is crucial in understanding and properly spending your money and your credit.
5. Prevent Identity Theft
Your bank can provide you with some kind of identity theft watch system, but if you want something beefier, check out one of any number of private identity protecting services. Trust me: if your identity is stolen and you aren’t protected, you could spend months and plenty of money trying to reclaim your credit score.