While some people are great with money, the fact is, most are not. To make matters worse, when most people come into a large, unexpected amount of cash, they tend to spend like celebrities. If you have trouble managing your money, or if you have a hard time dealing with sudden income changes, this savings advice from We Know Money will help you keep your finances in order.
1.) Keep Debt to a Minimum
One of the easiest ways to keep your spending in check is to avoid taking on debt. The problem with debt is that it gives people a license to spend money that they don’t have, and at the time, it almost feels like free money. Unfortunately, when it comes time to pay the bill, most people realise that they have dug themselves a financial hole. Of course, it doesn’t help that credit card companies send out offers by the truckload to virtually everyone in the country on a daily basis, but by refusing to take part in these offers, you can avoid the temptation to spend money you don’t have.
2.) Make Saving a Habit
If you have trouble living within your means, you probably don’t save, but you need to realise that saving is one of the best ways to keep your spending in check and to plan for unexpected emergencies. Essentially, saving is all about discipline. Each time you get paid, you should devote a certain portion of your money to a savings account. If you aren’t able to resist the temptation to spend your savings, ask a friend or relative to hold onto the money for you. Additionally, you may want to partner with a bank or investment firm that will be able to place your money into an account that doesn’t allow you to draw against it for a long period of time.
3.) Make Lists
Another great way to avoid spending every penny you have is to make lists of items to purchase when you go shopping. Research has shown that individuals who go shopping with lists are far more likely to stay within a budget than those who do not. The problem is that most people who don’t make lists are more likely to browse while shopping. This can then lead to impulse buys and other purchases that you don’t really need. By having a list and sticking to it, you can avoid these extra purchases, allowing you to stay within your budget.
4.) Make a Budget
Speaking of budgets – make one and stick to it! Just like lists, having a set budget can allow you to spend only what you need to. At the beginning of the week or month, write down all of the bills you will need to pay for the upcoming pay period and then figure out how much you will have left. As mentioned, devote a portion of what’s left to your savings and then you will have a rough figure of what you can spend.
5.) Don’t Use a Debit Card
While debit cards are incredibly convenient, they can also cause you to spend more money than you have. This happens because debit cards are quick and easy to use, and many people don’t keep up with the balance in their accounts. By the time they actually check into how much they have left, they may realise that they’ve spent more than they planned, or worse, that they have gone into overdraft and incurred banking fees. After you’ve made a budget and figured out how much you’ll have left to spend after bills and savings, try to keep the remainder amount in cash. Doing so will allow you to actually see how much you have left to spend as opposed to simply visualising it in your head.
If you’re still having a hard time managing your finances after following these steps, you may also want to consider partnering with a financial advisor. Financial advisors help individuals to come up with plans to manage and invest their money to help it grow, and an advisor may also be able to give you tips on prudent fiscal responsibility.
I am a freelance writer. I enjoy writing about money and how it affects our habits, our behavior, our everyday life. When I am not writing, I switch to mommy mode. I have a 9-month old baby boy who loves keeping me on my toes.
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These are important money management tips to live by. With the economy being as fragile as it is, it’s absolutely crucial that everyone develops and sticks with good personal finance strategies.
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gentm Reply:
August 7th, 2012 at 8:29 am
Yeah, wouldn’t it be nice if we all could just develop good personal finance strategies we could use everyday.
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Fatima Hipolito Reply:
November 8th, 2012 at 10:55 pm
Hi there its nice to see you list in here, I like to read and to know the topic you share in here…
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Hi there Gentm! Very useful tips there. I like the idea of not using credit card. But I think that people’s discipline is the problem not the card.:)
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gentm Reply:
August 7th, 2012 at 8:42 am
Thanks, I’m glad you enjoyed the article and found the tips useful
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Debit cash is better than credit card, without a doubt. But cash trumps all of them. They say debit card is as good as cash, but the thought only having limited cash on hand makes us more conscious and disciplined with our spending.
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gentm Reply:
August 7th, 2012 at 8:52 am
I know some people who swear they manage their spending better with a debit card and then some who swears using debit cards only make them want to spend more. The truth is, it works differently for everybody. The above tips might be able to help “some” people in managing their finances better and then it might not. We all have different personalities, different spending habits, what works for one might not work for another.
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These all 5 points very important. Saving habit is the best habit. Making list of things makes easy to buy things. All these points are so true.
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Prepare a list of good qualities about yourself and focus inward. This will help resolve any internal insecurities that you have. Remember, those insecurities are manifested outwardly through your jealousy.
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All shopaholics should read this! Another tip is to simply leave your cards at home and just take a little bit of cash. That way you can’t overspend! Although that does require a touch of discipline
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Useful tips, and these days, they must be followed if we don’t want to get in crisis. As a desperate shopper, I know that it is a sad thing, but these are really hard times for the average citizens like me.
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I think these points are incredibly important. Saving money into an emergency fund (at least 1 month of your cost of living, ideally 6 months) is imperative. It’s not a question of IF some sort of emergency will happen (natural disasters, unforseen car problems, medical issues, being laid off, etc) but WHEN they will happen. So the key is to plan ahead, because believe me, you will need it at some point in your life.
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I like Warren Buffets quote here that I read the other day where he says “Spend only what’s left over after you save” instead of save only what’s leftover after you spend.
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Nice solution for a big problem. Whenever I go for shopping, I easily find lot of things to buy and sometimes it’s really difficult for me to ignore them. I think if you decide your budget in advance, you can control your spending.
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Hi Genevieve,
Nice post and this isn’t an area I have a problem with. I grew up with a Mom who was not only budget conscious but unbelievably frugal. I definitely inherited the budget consciousness but I’m not as bad as she is.
I don’t spend money I don’t have and I hate to shop so I’m saved in these areas.
Great tips though because I’m sure most people aren’t like I am.
~Adrienne
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Nice post. On a area I have problem with. I try to spend less but always shoot a bit higher than the target, thanks partially to my debit card!
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really useful help here, personally I find I tend to “emotional shop”, like some people feed their emotions with food, I feed my emotions with handags and shoes!!
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Hi,
I find this to be very useful advice because I am one of those persons that could be a little more careful with spending money. I do save money and I plan a lot for the future but sometimes I just go with the flow and start spending way too much.
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Gentm: When I go shopping I always make a list for two reasons: 1. It helps to save money because I do not buy everything I see (Even though I still usually pick up a few extras). 2. That is the only way I actually get everything I need.
I would say that I am pretty good at saving my money and living within my budget, but lately I have thrown myself way off track with my saving. I was doing good, but I started spending out of my budget and now I must re-focus. I learned that I have to take cash out the ATM and not use my debit card. By taking out cash, I will be setting a spending limit.
I do not like living pay check to pay check, but it is part of what drives me to work hard at pursuing my dreams.
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When you want to buy something, always think of a question that will it needed and must buy? After you buy this thing, will it always be keep aside in your house and seldom use it? The economy is not so good now, so everyone should think twice before you buy.
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Hi Gentm,
I have found myself on the wrong side many times after spending thoughtlessly. I always do it out of my love for my family. I love the habit of saving, though. Saving habit has enabled me to keep enough reserves for tougher times. We may not be earning in big figures for life and we can never predict what is in-store for us in the future. Any unexpected costs may devastate us if we don’t save regularly. The one good habit which I have is, I don’t spend on useless things.
Thanks again for this post,
Sanjib Kumar Saha
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Making a decision to save is one of the most difficult decisions. We do not like saving because Americans are used to getting what they want. It is easier to save when your back is against the wall. I have gotten away from my practices but when I was growing up I saved 2/3 of my check.
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With passing time, people often grow shopaholic and no doubt the glittering market promotes the obsession of shopping. Making a list for necessary things and keeping the rest in wish list is a nice idea. After some time the need of some particular things just disappear.
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If you want to buy something, think really hard: Do I *really* need this? Then, look if you can find it cheaper somewhere else or if there’s a cheaper variant of the same product available somewhere. Saves me some money every time.
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I am actually veru much guilty of this one and although I do not deny this, I want to cut my spending by half this year… it has been quite successful so far and I was able to save the money to start an online business
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We hardly quit what we are use to? Once you have ATM Card with You
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The credit card is the great evil of mankind. People need to learn to spend less than you have, that’s all!
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True story, everybody feels like a celebrity when the paycheck comes, but then they see themselves struggling when the month is about to end (like me).
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Gentm: I think most important to understand what is your life purpose, but truly understand! After that you will know for what purposes you need money and just will not spend it. For me this is best way) or just have a dream for witch you need to accumulate some big money and when you’ll think buy or not it helps) I wrote not all that I want cos English is difficult to me.
Thanks for the post.
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