The abilities to manage your personal money are one of the most important in our life which, unfortunately, not many of us have.
And more regrettable is that no one at school teaches you how to manage your money or how to earn money or how to spend the money you have.
Therefore, I would like to share with you a simple, yet efficient list of 10 methods to manage your personal money, which can bring you result both on short term, but especially on medium and long term.
10 methods to manage your personal money
1. Set your financial potential
The very first thing we should do before starting to make a plan on how to manage our personal money is to find out image and financial potential we have and we desire.
In order to do this, there are a series of questions we must answer as honest as possible:
What is my current financial status? What is my revenue each month? How much money remains at the end of the month? Why is the situation like this?
Where do I want to be, financially, in the future? How much money do I want to earn in the future? What do I want to buy in the future? What di I want to do with the money in the future?
How do I plan to fulfil the things I want?
These are some questions which help you understand where you are right now, financially, where you want to be and to create some steps in order to get there.
This method is very important because is the main step helping us achieve the remaining 9.
2. Use a Personal Budget
It is very important for us to know what we have planned to buy monthly or where does our money come from. It is important to have a budget, because it shows us the image of our expenses and earnings and it show where are the money “leaks” that we generate and that we should stop.
You can find out more things about the usefulness of a budget in a previous article called 8 essential things you should know about a budget and, if you want a personal budget, you can download one HERE for free.
3. Save. Save. Save.
Start saving money from now on. Try to observe the personal budget and try to save each month an amount of money for so-called “rainy days” or in order to buy something you really want.
Because the temptation is very high due to the fact that you can spend it immediately, put the money you saved in a bank account, as this way you will think twice before withdrawing them from the account.
4. Use the EARN – SAVE – SPEND technique
Many of us are people who, after earning some money, the first thing they do is to spend them. This is a technique where you are not interested to save money, but to spend with no purpose and, after that (at the end of the month) you are thinking to save some of the money you have left. (EARN – SPEND – SAVE technique).
You should try, as the first thing after you earn some money, to think about the budget you have planned, about the savings you want to make (this means to save money) and afterwards to go into the period when you have to spend them.
It is a logical process which must be permanently observed.
5. Have a personal card and put your money on it
Always use a card to receive your wage, to deposit your savings or other money you have. It helps you a lot to save just for the simple fact that the bank is quite far from you and, in order to withdraw some money, you have to pay a fee.
This helps you think twice before withdrawing some money.
6. Do not hold more than one card
The number of cards we hold is very important as well. Try to hold as less cards as possible (namely 1), because the more you have, the more you spend on monthly fees and that draws down the entire budget you have planned.
7. Rent, do not buy
Many of us are people who want to buy any product, even if they use it only once.
Try not to be that people and think twice if a product is worth buying or not. There are a series of products which can be rented easily for a small price: books, CDs with movies, clothes we only wear once and many others.
Make your own list of products worth buying and one with products which are NOT worth buying. It will help you a lot in figuring out what is necessary for you and what is not.
8. Buy products when they are on sale
Always, if you are in a period when you want to buy products with a value higher than 20-30 lei, try to postpone and buy them when they are on sale. Thus, you can easily save anywhere between 10-50% of their value.
This rule can be very well applied if you want to buy clothes. You can find the largest sales there.
9. High monthly instalments instead of small monthly instalments
We are always happy when the instalments we want to pay are small when we want to buy a product.
If the instalments are small, it means that we have to pay for a longer time period, which means that the interest and the fees the banks will collect are very high.
The higher the instalments, the shorter the payment term, which offers us a discount regarding the fee paid to the bank.
Besides this, a high monthly instalment offers us a financial discomfort at the beginning, but an added value on long term. We can never know when we need money in the future and it will be even more difficult if we have an instalment to pay.
Try to choose high monthly instalments, whereas on long term this will help you save more money.
10. Save 1 dollar/euro each day
I know it sounds very funny, but it is very useful. Try to make a piggy-bank where, each day, you can put 1 doller/euro. You will see that after a while you will get used to it.
Think about that dollar as a saving for harsh times, times when you need some money right away. You can even make some rules for using these money in order to help you spending them as correctly as possible and according to the budget.
Thats all for now.
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