Learning how to manage money is the most important thing that a person can do for themselves. Think about it, if you don’t know how to manage your money, you will just as easily lose all the money that you worked so hard to make. What people do not realize is that Good Money Keeping and management is something that is LEARNED. It’s like a muscle, the more you use it, the stronger you will be at it. Getting stronger at managing money is essential to survival in today’s world. There are plenty of news stories about athletes and lottery winners that lose their entire fortune in a few years. Why is this? They do not know how to MANAGE money. They are living proof that even the richest people can lose everything they have if they don’t learn this very important skill.
Before looking up money management advice, it is important to figure out exactly WHAT it takes to effectively manage money. GoodMoneykeeping really simple actually. There are only two things a person truly needs to manage money properly. Those things are: a plan and self-discipline. That’s it.
Have a plan. We all have bills to pay. Plan your savings, plan your spending, be organized and track everything transaction that you make. Nobody else will take care of your Good Moneykeeping for you. Whether you use the computer or a notebook, track all your earnings and spending.
Have self-discipline. Of course it’s okay to splurge on things every now and then, but first and foremost are the bills. If your money is running a little tight then do not buy that new LED TV. You really don’t need a new TV, at the end of the day you need to pay the bills and the people charging you won’t care if you don’t have enough money to pay on time.
Now that we have the extremely basic stuff out of the way, let’s get to some real money management advice! If you already follow these ideas, or something close to them, then you are already a good money manager!
Have a savings account: I put 10% of my earnings aside into the bank, and never touch it. This is your savings account. It’s literally money to be saved and the best part about it, you gain money through interest the more money you have saved up. Don’t touch this money, it’s only 10% of your income. Let it grow.
Have an emergency funds: I save another 10% of my money but it’s purpose is different. This is the emergency funds. If your car breaks down or your toilet stops working, this is the money that you use to fix the problem. Why should you have both a savings account and emergency funds? It’s because you don’t want to spend all your savings on an emergency. Even with an emergency you should still have saved up money. It’s just a good idea to always have a backup.
Organize your spending! If you find trends, for example you spend more money on fast food than you do on groceries, then you can plan accordingly. Find out the luxuries that you spend money on and then focus your money onto things you actually need.