3 top tips for successful money management
Personal finance is personal, and there is no ONE way or method to manage your money ‘well’. It all depends on who you are as a person, your lifestyle, and your financial situation.
And managing your money well is not just about the budgeting style you use. It is about knowing where your money is going, being able to make conscious money decisions, feeling confident you can afford your financial commitments, and enjoying your money in the now whilst building wealth for your future.
So let’s dive deeper into how to successfully manage your money:
1. Living with your means
To live within your means, means to not spend more than you earn.
Logically we know this fact, but can be hard to execute… especially in a world where wages have not gone up accordingly with inflation and consumerism is at an all time high (hello sneaky ADs everywhere we look!)
Having a plan for your money (a budget) is vital to help you manage your money successfully and that you stay out of unmanageable debt.
Research shows that 50% of adults who are struggling with debt, also have a mental health issue, made worse by the money struggles. Being in debt can be stressful and overwhelming and have a major impact on all areas of your life.
To avoid unmanageable debt and stay on top of your finances, having a spending plan for the month ahead is the number one place to start.
2. Pay your bills on time
As boring and annoying as it is, being an adult comes with responsibilities and that includes paying bills. Whether it is your rent, your phone bill, your utilities or your gym membership, these financial commitments are a necessary part of life and unless you plan to go and live completely off grid, then you have to pay these bills.
It is important to pay them on time because if not, you run the risk of your credit score being affected (which means lenders are less likely to give money to you for future needs such as a mortgage).
Having a separate bills and spending account can be extremely helpful to manage your money successfully. One account is where you get paid your income, and you ensure you leave enough in there to pay all of the bills you have coming up for the month. Then you can transfer your remaining money over into a separate account for all of your general spending for the month.
Keeping it separate makes it easy and straightforward, ensuring you do not accidentally spend your rent money on shots of tequila or a new coat!
3. Make your money work for you
Money can be an incredible tool for creating security and freedom in our lives, but only when you put it to work.
If we leave our money all sitting in a bank account (collecting dust for a rainy day) or we live paycheck to paycheck (spending everything we have), then we become slaves to our jobs.
There is no flexibility or freedom.
To manage money successfully, you have to view money as a tool. How are you going to use that tool and what are you building?
Even though saving and spending are integral parts of our financial lives, investing to build wealth long term is the best way to put our money to work!
Learning about investing, whether that is in the stock market or in property, can be life changing and helps set you up for success in the future.
These top three personal finance tips on successful money management will help you feel more in control of your money, and support you on your journey towards financial independence.
Why not listen to an episode of the Talk Twenties Podcast with Laura Ann Moore who talks about how she saved 40K in her twenties.