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The first steps to financial stability and living your best life financially start with you. It all begins with how you manage your money even though you are not a certified money manager and have no idea where to start from. Whether you work for your money or you make your money work for you. From having that financial goal, creating a plan for it, and implementing that plan. And all of these things are centred around money management.
It’s not just about throwing money here and there in the name of savings or investment. But knowing what goal that money will achieve for you. Managing money is a lot of work. But you will be seeing easy and practical ways to make it work and you eventually become your best money manager ever.
What is money management?
Money management refers to the process of budgeting, saving, investing, spending or simply overseeing the money usage of an individual. To break it down more money management means knowing how to manage your money that is to be cautious with what you do and not do with your money.
Whether you have no idea or never tried to be careful with your finances. There is always a point in starting. You can start by learning how to save, or by creating a monthly budget. Or by simply tracking your daily expenses and by the end of a week you know what you spend. When you know your expenses then you start working on how to cut down some of them.
Hence, money management is knowing exactly what to do with your money. It’s you sticking to your financial plan to be able to achieve your goals.
Who is a money manager?
A money manager is a person that manages the portfolio of an individual investor or firm. By portfolio, we mean a collection of financial investments such as bonds, stock, commodities, cash, and cash equivalent.
You can choose to hold and manage your financial investments or allow a money manager.
But in this post, we will be talking about money management at every level, not just investments.
Can I be my money manager?
Yes, you can be your own money manager. Whether you can afford one or not you can be your financial advisor and manage your money in the best way possible. However, to succeed at being a money manager for yourself you will need some sort of guidance.
You won’t be a money manager overnight
Even a certified money manager didn’t become one overnight how much more do you who are just tired of your financial status, with no idea where to start from but just have a goal to achieve financially.
You won’t get there overnight but you can definitely start from somewhere and master money management like you studied it in some ivy league college.
5 Ways you can be your best money manager
The secret to becoming good at managing your money is by starting with the simple ones which the list below will be arranged in that manner. The things you can literally start practising after reading this post today. So here we go…
1. Track your spending
A lot of us have no idea how much in total we spend daily. Yes, we know what we do with our money every day. but we don’t know how much we spend by the end of the day. Being able to track your spending is the first and easiest way to start managing your money. As a matter of fact, it is basically what money management is all about. The knowledge of what you do with your money. Here is how you track your spending
How to track your money spending
Here is a simple way to track your spending if you’ve never done it. You are a step closer to managing your finances the right way.
- Have a pen and paper with you before you step out for your activities for the day. It doesn’t matter what activity you are starting with (like going to the gym, dropping kids at school or going to work). Have that pen and paper in your purse.
- Don’t try to be careful with how much you spend. Just spend as you usually would.
- Write down everything you spend money on even if it cost you just a dollar or less. Write down that cup of coffee, the gas you bought, the tip you gave and that ice cream to cool you off. I can’t think of all the many things we spend little money on every day but make sure you write them down with the amount it cost you.
- Don’t be too quick to add up your expenditure list yet. Make it the last thing you do before you go to sleep. Just to make sure you won’t be spending any more money for the day.
Doing this will give you exactly what you spend every day and you would be shocked with the total. It doesn’t stop there. Do this exercise for the entire week. What you spend on Monday won’t be the same as Tuesday and the day after. After a week then you can know your average daily expenditure.
2. Start cutting down some expenditures
The next question to ask yourself is this, are you okay with how much you spend daily or in a week? If your answer is yes, then you can skip this money management guide. However, if, your answer is no. Then take this guide seriously.
Start thinking of ways to cut down your expenses. As long as you track your spending well without leaving anything out this should be easy.
Pick up the list of things you spend your money on, and start seeing the things you can cut down how much you spend on. Or cut off completely. A lot of time we spend on things we think are necessary until we see how much money they take from us then we begin to question if they are that important after all.
What tracking your spending will do is open your eyes to such expenditures then you find a way around them. Eat in more, cut down on the ice cream, reduce the often pizza order, cancel that premium membership or go for a cheaper plan. Just do something to make sure you don’t spend as much as you do daily or weekly.
No spend challenge
one effective way to cut down your expenses is by trying a no-spend challenge. The challenge is simple, you pick days you don’t spend a penny or you can go a whole week without spending money. Well, that will be after you’ve bought the necessary things you need for existence.
3. Start saving money
Saving money is when you put aside some percentage of your income to be used not anytime soon or very soon in case of an emergency. Saving money is all about having a backup plan financially.
There can’t be too much emphasis on the importance of saving money. However, to be able to be the best money manager and manage your money right you must include money-saving in your financial plan. Here is how you can save money fast.
How to save money
Choose the amount of money you are comfortable saving. How much percentage of your income are you going to save. Even though according to some budgeting rules we are to save 20% of our income. But I will say save nothing less than 10%.
Choose a method of saving that will fit your income type. There are different types of saving methods that will work for you. These will help you be effective in saving money.
Have a time frame to save and a goal to achieve. If you want to save a certain amount of money for a whole year. what is the plan for the money saved at the end of the year? Don’t save for no reason.
Save money for bigger purchases
Instead of removing a huge amount of money to make a big purchase. Save some money within a period of time to be able to make the purchase. This is a very essential money management guide.
Saving money for bigger purchases will help you stay debt-free.
Budgeting is something you must know and learn as a money manager. You must know how much you earn and how much you spend. There are a lot of budgeting templates and spreadsheets to make budgeting simple. But before you stumble on any, here is a simple budgeting guide for beginners.
How to create a budget for beginners
Preparing a budget might sound overwhelming at the beginning because you are just starting out. But as you get used to it, it becomes easy. Plus there are beginners’ budget templates and a budget spreadsheet to help you out. Before all of that…
Here are some simple steps on how to make a budget:
- make a list of all your monthly expenses
- personal care
- car payment
- eating out
- health care
- Calculate your income which is every money you are going to earn for the month. If you have more than one job or many income streams write them down and calculate how much in total you will make in a month.
- Sum up your income and expenses for the month. You will either have a balanced budget or an unbalanced budget.
When your budget is balanced it means your income equals your expenses or your expenses are less than your income. Hence, an unbalanced budget means your expenditure supersedes your income. In cases of an unbalanced budget, you have to make adjustments to your expenditure.
5. Start an investment
If you’ve taken your time to know exactly what the job of a money manager is or read who a money manager is from the beginning. Then you know making investments is the main job of a money manager.
Making investments is wealth growth and you can’t plan on becoming financially free without growing your income.
The first thing you must do when considering investments is to know the types of investments. So you can choose what will work for you.
Then lastly is knowing how to make investments. You will need a lot of research in order not to make a mistake. When it comes to making investments, please, get information from the right sources and seek help. Don’t go about risking your money without help from an expert.
Anybody Can Manage Money Like a Pro
Yes, that’s right anyone can manage their money and do it like a pro. Even if for a start they have no idea where to begin from.
If you are that person, all you need is the basic knowledge about money and how it should work for you and you will do just fine.
- Track your spending
- Cut down expenses
- Save money
- Start budgeting
- Make investments
If you can follow this simple guide then you will be on your way to becoming your own best money manager.