We all want to be better at managing our finances. It is understood by most people that responsible and smart money management will improve our lives. Responsible money management allows our lives to be less stressful—less fraught with questions like “do I have enough in the bank to cover this week’s groceries?” and “what will I do if there is a real emergency?”
If you want to rid yourself of the stress of having too little money and too many expenses, sometimes it is essential that you change your whole perspective on money and how it should be handled.
These simple tips can help you become better at managing your finances and creating a better future for your family.
Every penny counts
If there is one perspective that every adult should adopt, it’s that every single penny earned and spent counts. It is often the details in life that make or break us. As the saying goes, “the devil’s in the details,” and that’s absolutely the case when it comes to money management. Every cent you spend is a cent you don’t have for something else. It seems obvious, but it’s easy to forget in the midst of a mindless transaction.
If you’re at the store and you see a $5.00 scarf that you like, and you make the decision to purchase it, that’s $5.00 less than you’ll have to pay a bill. But who cares, it’s only $5.00, right? No. It’s more than that. It’s likely you make a $5.00 decision like that once a day or more. That would mean $150 less that month for other things. $150! That’s an entire electric bill or a whole week’s worth of groceries. Be careful how you handle small, mindless transactions.
Small savings add up to big savings
This in many ways works in accordance with the first tip. Developing a savings is the best thing you can do to alleviate stress in your life. Knowing that you have a crash pad of funds available for an emergency is a wonderful feeling. The problem is, most people don’t set aside any money because they don’t have much to set aside.
Make it a rule that you must set aside a certain dollar amount each week. It can be small, say, $20. It may feel stupid and insignificant, but if you stick to it, in a year you will have saved $960! That savings could easily help with an emergency like auto repairs or a doctor’s visit. Save whatever you can.
Credit is not free money; it’s expensive money
Do not take out credit cards you cannot pay off immediately. End of story. Credit is useful, but it is also very tricky. It’s easy to look at credit cards as free money, but it is not; it is expensive money. Every time you buy something with a credit card, you are not only buying the item, you are buying interest that you owe to the bank.
Instead of just buying a $20 shirt with $20 that you know you have to spend, you are buying a $20 shirt and $3.60 worth of interest you need to pay to the bank (if you had a credit card with 18% interest). That means you didn’t buy a $20 shirt, you bought a $23.60 shirt. Do not use credit unless it is a dire emergency.