When it comes to finances, people fall into two categories, those who know with money and those don’t. Still, the ones who have good money management skills are not born that way; it is simply a skill that can be learned. Finances are an important part of our lives and managing your assets right can sometimes be essential for your survival.
The most important feature of money management skills is not to spend more than you have. You have to create your own budget and follow it step by step. I know that this can kill spontaneity, but you can always set aside a nice sum for random adventures and splurge each month.
You can look back to your spending habits to see where and on what you spend your money. The majority of people spend far more on entertainment and pleasure than they think. Probably you are one of them by not knowing how much money you give away on nights out, dinners and lunches outside your home, because people do not like to think about that. On an annual basis that sum equals thousands of dollars usually. You need a plan immediately to check where your money goes in order to rationalize your spending.
Many people just go to the nearest store and buy things on an ad hoc basis coming home with more things they do not need than they do. This is a typical trap all of us fall fro regularly. Well, given that you are going to have a budget, grocery shopping is also one item on the agenda. A grocery shopping list can be very useful here since it will keep you away from spending on unnecessary things. Also, you should examine the prices in several stores to see which one offers the lowest. Coupons are yet another advantage so look for them online next time you are surfing the Internet. It might seem a little bit tedious to sit and make a list and it is way more fun to shop spontaneously when you see the items in the supermarket, but you will get used to it and start loving it when you see how much is left at the end of the month.
After a year or so when you will have saved a nice sum, you probably will start thinking about how to double or triple that money. You will realize that the rich people are rich because they made something out of their savings. Investments are a very lucrative activity which can turn your $200 into $500, etc. Investors are smart, money conscious and they know what they are doing. Why don’t you just become one? There are plenty of resources that can help you come up with an investment plan and what is worth in the market.
Share Your Vision
If you have a partner or a spouse, it is very important that the two of you share the same vision. You are supposed to save together, plan together, and even invest together. it can be really tough for a person if the needed support is not in place. You can even consult an investment adviser who will probably reveal additional saving tricks to you which you wouldn’t think of in a million years.
If you Lack Discipline Turn to Autosaving
Since it is easier said than done to cut back on the many expensive joys of our life, and if you think that you will give in and engage on a spending spree, then, you can opt for autosaving. Designate a certain sum from your salary that will automatically go to your savings account. This is a great way to hide your money from yourself, and you will thank yourself later. Discipline can be learned over time; you just have to set the right goals and know what you are saving for. It will motivate you to keep your hands off things you cannot afford.
Discipline is Possible
Well, as we already said, it can get hard to stick to your adopted budget, especially because you have the power to change the budget. It could be hard to resist to taking out more money than initially planned, but money management falls back precisely on sticking to your plan. It is just like going on a diet where you have to show that you are serious and committed to the cause in order to see the results.
If you make it through the first year and see how much money you saved, the second year will be far easier because you will know that the reward will be extraordinary. A financial news reporter from the UK, Michelle McGagh, is one example of how it pays off to save. She committed herself to an experiment not to spend money on unnecessary things for an entire year and ended up saving $23,000 by year’s end. You do not have to be as extreme as she was- no hairdresser, no make-up, no transport (except biking), no clothes, no entertainment spending- but you can try to do the half of it. Test your financial management skills and make sure to follow all the steps to improve them and the results will be quickly visible.