If you are like many of us, you’d just love to be a better money manager. The problem is that good money management is hard. It takes time and dedication. For example, you should really be tracking all of your spending – right down to that drive-through cup of coffee you bought this morning. Then you have to divide your spending into categories, review your categories, decide where you could make cuts, etc., etc. But you’re busy, life is just full of distractions and there just never seems to be enough time in the day to do all those things you should be doing to improve your personal finances.
Does this sound familiar? Well, you’re not alone. When it comes to money management, most people are not perfect. Whether you earn $20,000 a year or $120,000, there are some simple things you could do to be a better money manager and happily enough, some take only a few minutes to complete such as these seven.
Think before you spend
When you’re out shopping, don’t be in a state of mindlessness. This is another way of saying don’t just start piling things into your cart. Stop and think about what you really need and how much you could save by not buying extra stuff. It’s fairly easy to cut unnecessary spending if you can make a habit of just stopping briefly to think about what you really need before hitting the checkout counter.
Have a budget
Okay, this will take more than just a few minutes. But if you’re like most people you don’t have a budget. You need to create one and then learn to stick to it. Write down all of your expenses and then see where you could make adjustments. Be sure to refer back to your budget on a regular basis to stay on track. If you need a little help getting started on a budget, this short video should help.
You’d be pretty unhappy if your employer cut your paycheck by 5%. However, you’d still be able to survive. So how about taking a cut now? Reduce some of your extras like that daily latte or weekly visit to the hair salon to cut your spending by at least 5%/ Do this and you should see your savings mount fairly quickly.
Have multiple savings accounts
Think about it this way. The tougher it would be to access your money, the easier it would be to reduce your spending. Open multiple savings accounts and make sure you pay yourself first. One of those accounts could be your emergency fund while another might be earmarked for a future vacation or a new car.
When it comes to saving money, every little bit counts. If you forgo those fast food lunches and save just five dollars a day, you’d end up with $1800 at the end of a year. It’s okay to begin slowly but your ultimate goal should be to put away at least 10% of your net income or your income after taxes and your other deductions.
Make it visual
Paper your cubicle, home and automobile with pictures of what you’re saving for. This is a great way to discourage overspending as this will serve as a constant reminder of why you’re saving money. For example, you might put photos of your vacation destination or that hot new car all over the place to remind you why you’re cutting costs and saving money.
Put your money to work
You’re working hard and your money should be, too. If you contribute to your savings regularly, you will be harnessing the power of compound interest. The longer you can leave your money untouched in a savings account or another investment, the more it will grow. That’s called putting your money to work.
Are you not just able to save money?
Of course, some of this advice won’t help if you have a really hard time saving money. The sad fact is that saving money is difficult. Plus, it’s easy to get caught up in what’s happening today and forget about future priorities like retirement or that new car. But there are some good ways to kick-start your savings. For example, you could change your withholding. If you’re typical, you probably pay most of your annual tax bill through payroll withholding. When you do this, a percentage of your salary is taken out of each pay period and sent to the IRS where it is credited toward your final tax bill. The IRS has reported that in 2011 the average tax refund was $2913. That translates into $242 a month. If you have your withholding set up to get you a big tax return at the end of the year, it means you’ve just given the IRS free use of your money and you’ve earned no interest on it. You could give yourself a quick raise by adjusting your withholding exemptions and then putting the money you get into your savings.
Automate your saving
It’s hard to miss money you never see. Set up an automatic monthly or semi-monthly transfer from your checking account to your savings account. You would not only be saving money but you might find you hardly miss it.
Change the deductibles on your auto insurance
You might also be able to free up money by changing the deductibles on your auto insurance. Review your policy. Check to see the deductibles on your comprehensive and collision coverage. For example, if you were to find that they’re $250, you might increase that to $500 or even $1,000. This would definitely free up money you could tuck away into your savings account.
Do you find yourself running off to the grocery store several times a week just to pick up a few items? Then you’re probably wasting both gas and money. Your favorite supermarket might be a good place to buy eggs and fresh produce but if you want to save money, you should join one of those warehouse clubs and start buying in bulk. This is especially true for nonperishable’ items such as toilet paper, laundry detergent, dish soap, paper towels and the like. You could stock up on three months’ worth of these items at a fraction of what you would pay for them at the supermarket and they’d never go bad. For that matter, you might even find that you could save money by buying meat and frozen fruits and vegetables in bulk.
Make it a game
You might find it easier to add money to your savings account if you make it more of a game. As an example of this, you could create a chart consisting of a football field except the yard markers would be your monthly savings goals. Then every time you got a first down by achieving one of your goals, you would move your “football” down the field and then reward yourself – maybe with a movie or a dinner out. Just don’t be too generous with your rewards as this could reduce your savings. If you have a spouse or partner you might make it a competition as to which of you could find the most ways to save money in the next 30 days. You might even make things more “interesting,” by putting a small wager on the outcome. Plus, whoever wins the competition for the month would have bragging rights – at least until the end of the next month.
I am an associate at National Debt Relief, which is a Debt Consolidation Company that has helped thousands of Americans facing credit card debt problems. We help with debt settlement, debt management, and other debt related financial crisis' facing consum