5 Simple Tips to Manage Your Money & Take Control
Whether you are a graduate student or contemplating retirement, the prospect of managing your money can appear a complicated and often overwhelming task. Money; a topic fraught with angst and uneasiness. A touchy subject. When an issue involving money is raised us Kiwis have a tendency to sweep the matter under the carpet. Doubt. Worry. Fear. Confusion. Words which come to mind surrounding our conflicts with money. Most of which can be avoided by way of understanding and simplifying our approach to finances. It’s time to acknowledge our shortcomings and confront the matter straight up. Time to better understand financial happenings, raise questions and seek help when we have doubt. That’s not us. That’s not the Kiwi way of doing things, to acknowledge shortcomings and ask for help. We don’t like to be seen as not being in control. It’s time to change our way of thinking toward money, to inform our way of thinking and make the decisions that count. It’s time to take control of our finances.
Take a breath, and simplify the process.
Us Kiwis are a simple breed. A spade-is-a-spade type approach is all that is necessary to un-complicate the complicated. The steps below, when followed diligently will allow you to confidently manage your money, to better inform your decisions. To take control of your finances.
#1 The Golden Rule: Spend less money than you earn
It’s not rocket science. If you can avoid spending more than you earn then the chances of experiencing financial strife will be reduced. This should be personal finance rule #1. A fundamental that we live by. Why isn’t this always the case? If you earn X amount per week, then make sure you do not spend above X. Simple. This point cannot be stressed enough.
It is also about future-proofing. Not only milestones like retirement but also ensuring you have the capacity to deal with the unexpected. Think medical costs, car repairs, the sudden bills that are thrown at us from time to time. Create an emergency fund that will allow you to deal with the inevitable difficulties that cross our paths.
#2 Track your Spending
Whether it be via pen & paper, an excel spreadsheet or one of a multitude of apps on the market keep a diary of your spending habits. You’d be surprised at where all your money goes and why each week you are hanging out for pay-day!
Start by checking over last month’s bank statement and label all your expenses.
- Highlight the needs/essentials that will be purchased on a routine basis, e.g., rent, groceries, petrol, power.
- Highlight the wants/non-essential items or consumables that will no doubt have added up over the past month
It is these non-essential items we will be looking to limit and in some cases eliminate from our routine spending habits. The daily coffee you buy on your commute to the office, is this always necessary? The same could be said if you are routinely eating out multiple times per week.
It is about identifying the things in your lifestyle that you can live without. This will allow you to free up much needed cash to spend at your leisure. It is about prioritising our expenses so that we can avoid living pay-check to pay-check.
#3 Utilise Apps – especially for Budget Planning
Like it or not, it’s the way of the world we live in. There is an app for everything nowadays, with financial planning and budget advice certainly not exempt. A quick flick through the app store will allow you to discover an app tailored to your needs to get you on track with managing your money better. You will find ‘Fudget: Budget Planner,’ ‘Budget Wiz’ and ‘Money Coach – Budget Planner’ all geared toward better organising your financial situation. There are even apps dedicated specifically for budgeting toward an event. Wedding planning and Christmas shopper apps are perfect for this time of year to allow you to manage your expenditure to reach an ultimate goal and endpoint.
The best part is that in today’s all-encompassing smartphone world, your budget planner is on you at all times to help better inform your decisions. Allowing you to take control of your finances.
#4 Save Better
If you haven’t done so already, create a savings account that is separate from your regular expenses account. When it comes to savings it’s about creating good habits. Divert a portion, possibly 10-20% of your income to savings. The figure is entirely up to you and can be adjusted to your situation. Try not to touch this account unless it is absolutely needed. Use a savings account with a goal in mind. Perhaps a holiday overseas or a new car. By saving better you will be able to take control, ultimately allowing you to achieve your financial goals and spend your hard earned cash at your leisure.
As you build your savings and you have a better control of your finances look to invest. It takes money to make money. Look away from low-interest savings account and instead look to prosper by way of investment accounts geared toward growth, rewarding your decision to invest.
Investment doesn’t have to be thought about strictly in a financial sense. Why did you spend 4-5 years at University? This is an investment. To get an education to allow ourselves an opportunity to gain a rewarding career. Or investment in training and up-skilling so we don’t stay at the bottom rung of the ladder – setting higher goals for ourselves. That’s the rational you should have when thinking about your finances.
It’s about being a step ahead, planning for the future now. Taking control of your finances.