A Beginner’s Guide to Money Management – Simple Steps to Take TODAY
Money management is a cause of stress, but it is also the key to the ultimate financial freedom. Successful personal finance combines knowledge, experience, and perseverance for a great outcome. Follow the simple steps below to get in control of your funds.
1. Create (and follow) a budget
Start with your income from all sources: salary, part-time gigs, and freelance work. Then, detail your expenses – some will be the same every month (rent, utilities, insurance), and some are more seasonal (holidays) and based on needs (new clothes). Every month will have a unique budget, but some core elements stay the same. And remember to pay yourself first – make the top item on the list of expenses savings for an emergency.
Making a budget isn’t enough – you have to track spending as well. If the budget allows $100 for petrol, and you already spent $30, then you only have $70 left. Expect to have to make adjustments to the categories when you first start to budget. After two to three months, you will have a good understanding of what you actually need and will budget more accurately.
2. Cut spending
A few things in life are necessities – food, shelter, transportation, and basic clothing, for example. The rest are luxuries. You might think of pay TV as a necessity, but is it? Do you need all of the subscription services like Netflix and Foxtel? Cancel or pause what you can, and find more creative and free ways to have fun. After canceling the extras, critically evaluate the remaining services and negotiate better rates. Many mobile phone, internet, and pay TV companies have customer retention departments that will work with you on the monthly bill amounts. If you are busy or unsuccessful in negotiating, try a service like Telco Bill Cutters. Telcos will negotiate better rates on your behalf if you are a business owner.
Other creative way to save include services like CheapBills, which finds the best deals on services like electricity, phone, and internet based on your postcode.
3. Handle emergencies
Some emergencies will not wait and can be stressful if you have no rainyday savings. Car accidents, home repairs, and medical bills can happen at any time. Think logically and do not let emotions take over. Consider a personal loan instead of a credit card to save on interest rates and discourage repeated borrowing.
Personal finance is not complicated, and requires only basic maths. Staying consistent and motivated to get your money under control is key to success.