Money: it’s not as hard to manage as people think, but lots of people struggle to do so. This can be for so many reasons: they’re trying to keep up with the Joneses, there’s so much choice, the media is telling everyone what they need, basic necessities have increased (think back to the blissful old days of no Internet, no cell phones and more).
But it’s important to stay on top of your finances because managing your well money creates options… gives you freedom. What can happen if you don’t manage your money well?
Less financial control
Basically, the opposite of freedom: lack of freedom. By not keeping on top of your finances, you surrender control of your money, and rather than making decisions about your finances, they make the decisions for you — and often, these decisions will put you at even more of a disadvantage than you already are.
No savings
If you’re not keeping tabs on your income or on how much you’re spending, you won’t be able to contribute anything to a savings account. When a big, unexpected emergency hits, you’ll find yourself floundering and going into debt to cover the expense; and then potentially struggling to get out of debt, which creates stress over personal finances.
Unable to accomplish your goals
Maybe you want to save for a holiday. Or a car. Or to put a deposit on a house. But if you don’t try to reassume some sort of control over your finances, you won’t achieve any of those goals and will likely end up feeling frustrated or dissatisfied with life.
How to manage your money better
The good news is, you don’t have to struggle when it comes to managing your money. Some simple habits can get your finances into much healthier shape:
Create a budget
This is the golden rule when it comes to getting your finances back on track. Boring, possibly, but it won’t seem so when you get on that budget and see your finances change for the better. List your income and expenses, so you have an idea of where you can make cuts if necessary and can start directing your money to where it needs to go.
Track your spending
Small purchases can mount up quickly, especially in the age of contactless payments and lesser use of cash. Keep your receipts and make a note of everything you’re spending so you can see where you might be struggling to manage it. You might find you’re spending much more than you wish to on clothes or food, for instance.
Add to your savings regularly
Set up a standing order transferring money from your checking account to your savings one so that you’re increasing your savings regularly. It’s a healthy financial habit that will help you to minimize the need to use a credit card or take out a loan if an emergency strikes (which it will, sooner or later).
Manage your tax affairs well
A late or incorrect tax return won’t go down with the Internal Revenue Service (IRS). Nor will the corresponding penalty do your finances any good. Check your employer is reporting your income correctly and make sure you’re putting away money for taxes in a separate account. You’ll then have the money there when it’s time to pay. Be sure to pay on time.
Save up cash for large purchases
Rather than make big purchases on your credit card, save up and pay in cash for them. This delayal of gratification gives you the chance to think about whether you really want that expensive new jacket, flash car or other items. It also stops you sacrificing essentials for them.
Managing money is important. Not doing so well can lead to all kinds of hardships, but simple steps like the ones above can help you to manage your money easier and reassume control of your financial future.
