Managing Money For Total Beginners

15th June 2018

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Knowing how to manage your money is imperative if you want to live a happy life and live below your means while remaining comfortable, and yet this is something that the majority of people don’t know how to do. Being able to manage your money in a way that suits you is something everybody should learn to do. It’s not your fault if you don’t know how; schools don’t teach this kind of skill, but they should! Don’t beat yourself up about not doing it so far, just get started as soon as you can. You’ll get such a sense of freedom when you take control of your finances, and you’ll feel more secure than ever.

Read on for some tips that beginners can use in their quest to manage their money!

Spend Less Money Than You Earn

In order to keep your finances under control, the first thing you need to be committed to doing is spending less than you earn. Spending less than you earn is key if you’re going to be able to put money away each month and live comfortably without going into the red. Here’s how you can make sure you’re spending less than you earn:

  • Know your numbers like the back of your hand
  • Take into account the bills that go out each month
  • Think ahead – is somebody’s birthday coming up, or an event that will cost money? Don’t forget about it to the last minute
  • Track everything you spend using an app, or even just using the notes feature on your phone

Spending less money than you earn will force you to stop impulse spending, and think more carefully about your purchases. You should end up with less junk and more money – win!

Get Out Of Debt Before Saving

Saving money is great, and everybody should be saving money to a certain extent. However, you should make sure you’re prepared to get out of debt before saving any money. If you’re putting money into savings while you’re still in debt, you’re just building up interest and will end up spending even more. Look at debt consolidation loans if you can, as this will make it easier for you to pay off multiple debts at once. Be vigilant about getting out of debt. Make sure you’re prepared to put money away aggressively and live without luxuries for a while. You can leave yourself a small amount of money to spend if you like, but be smart. The sooner you get it paid off, the better.

  • Educate yourself about interest rates so you know exactly how much you’re paying
  • Speak to a financial advisor to help you figure out the steps you need to take to get your debt paid off
  • There’s always a solution, so make sure you stay in a positive mindset
  • Set goals and stick to them to help you get everything paid off
  • Pick a method of paying off debt that suits you. Some people find that paying off the smaller debts first helps them, while others find that paying off the larger debts first helps them. Paying the larger debts first will mean less interest, but paying off the smaller debts can give you a great sense of achievement that snowballs

Dedicate A Percentage Of Your Income To Savings

When your debts are paid off, you can dedicate a percentage of your income to savings. You might not want to save as much as you were spending on your debts if you were in a lot of it, but you should have a good idea of what you can comfortably afford. It can be too tempting to think about things we want in the short term, but playing the long game with your money is the smarter route to take.

Make Plans And Goals For The Future

Think of your plans and goals for the future and then come up with plans to meet them. What are your retirement plans? Do you want to buy a house, maybe a car? Having plans and goals will keep you motivated and help you to keep your eye on the prize. Write them out and put them somewhere you can see them everyday. Remind yourself of them when you’re tempted to spend your money on something that you don’t really need.

Make Your Money Work Harder For You

One way to manage your money well is to make the money that you do have work harder for you. How do you do this? You can invest it, but beginners can make a mess of things if they aren’t careful. If you’re just starting out, do some research. Consider using an app that rounds up your purchases and makes very small investments for you to get you started. Investing your money is one of the smartest things to do with your money, although it does come with a certain level of risk.

Passive income is another great way to make your money work harder for you. Many passive income ideas can be set up with very little capital, and you could be earning more money while you sleep. You just need to be prepared to make the initial investment and make small amounts to begin with. You’ll only need to do a small amount of work to keep your money coming in, for example, marketing an ebook that you wrote. Then every time it sells, you make cash. Bingo!

Pay Your Bills On Time

Never run behind with your bills. Work them out in your budget and take the cash away from your earnings so you don’t even have to think about them. Just make sure you always have the right amount in your bank account.

Get Insurance

Insurance will protect you financially, whether you’re looking at your car, health, or your home. It may seem like an unnecessary expense, but you’ll wish you had it eventually.

Hopefully, these pointers have helped you to figure out a few things. Thanks for reading!

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