There is more to better money management than how much you earn. Earning is one thing, managing and planning your finances, another.
With millions of people out of work and many businesses cutting down on their operations and expenses, now is even a better time to take care of your financial health.
The coronavirus pandemic has already forced many countries to implement lockdowns and stay-at-home orders, enabling many of us to save money on going out.
However, with a pandemic or not, these money management tips will help to save your sanity by enabling you to have control over your expenditure.
Table of Content
1. Take a break from spending
This step does not mean not spending at all.
A spending fast entails going through a certain period without unnecessary shopping. Usually, it can last three to four weeks.
Shopping is tempting for sure, especially when you visit eCommerce sites, such as Amazon. However, you’re not forbidden from buying essentials like medication, hygiene products, food, and gas.
You can do an assessment of the things you need and those that you can do without. You’ll be amazed at how much you’ll have saved at the end of your fast.
2. Create a budget & track your spending
Create a budget showing your current and expected revenues and expenditures.
Keep track of the variances from expectations every month. This practice will enable you to know what you’re spending on and how much more money you have left for the remainder of the month.
You should also avoid committing to new recurring monthly subscriptions or bills, take advantage of discounts and coupons, and go for cheaper alternatives.
You can use any cash surplus on fun and entertainment. This would be a great way to reward yourself for adhering to your budget.
3. Clear your credit card debt
Of course, your credit card was not going to miss from this list.
As part of the money management skills, you need to learn how to put away your credit cards. You can come up with a savings plan and a budget on how to spend your money.
Make it a decision to settle your bills using a debit card.
Get more tools and tips to help you become debt-free here.
4. Save regularly
Now that you’ll be cutting down on your expenditure and credit card bills ensure to set up a standing order from your checking account to your savings account.
This money management tip will help you to establish healthy financial habits because you’ll not have to remember to save.
5. Make a financial plan
What is the difference between a budget and a financial plan?
A budget helps you to monitor your monthly spending, but a financial plan is a long-term strategy for prioritizing your financial goals.
A budget helps in mapping out your plan and expenses for weeks and months, while a financial plan is a money management tool, enabling you to set financial goals for 5, 10, and 20 years. You can create a financial plan to buy an estate, for retirement and education needs, etc.
6. Work on new sources of income
When you have more money in your bank account, it becomes easier to follow through with your money management goals.
When struggling to make ends meet or when living from paycheck to paycheck, it is possible to fall back to old habits, such as using your credit card.
How else can you stick to your budget? By finding ways to earn more.
It might be hard to find a reliable source of passive income, especially in the middle of a pandemic. But, you’ve got to wake up and try each day.
Still, keep in mind that a budget or a financial plan is an appropriate money management tool, but it will not do the work for you. Picking up new habits takes time, but you’ve got to make some effort by making the right decisions for your financial health.
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She is also a personal finance coach who will help you manage your money better by reducing wastage and identifying opportunities to grow your income. Follow her on her social media pages where she talks about personal finance and business growth strategies.
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