How to Better Manage Money

Better Manage Money

How to Better Manage Money. Financial problems can easily surface if left unmanaged. The best way to avoid financial problems is to learn to budget money and watch spending closely. Learning to better manage money can help save you from financial distress later on. Here are some simple steps to better manage your money.

Step 1

Record all your expenses on paper or on a spreadsheet. Categorize your expenses under areas such as home mortgage, car payment, electric bill, grocery, entertainment, kids and other expense categories. This way you can keep track of how much is spent on each category and develop a budget plan.

Step 2

Review the expenses incurred each month. If it exceeds your take home income, look for ways to reduce your spending. Eat out less, shop for cheaper alternatives such as insurance or medication, or take your children to less expensive activities. The rule to remember is if you can't pay it with cash, you can't afford it.

Step 3

Set aside some money for savings. Financial professionals advise that the amount should be at least 10 percent of your pay. If you can't save that much, every little bit you save adds up and can make a difference.

Step 4

Buy what you need, not what you want. If you can't afford it, don't buy it.

Step 5

Make it a habit to check your bank and credit card statements. Credit card companies and banks can sometimes make mistakes that cost you money.

Step 6

Strive to own a house instead of renting. Owning a house is an investment in your favor and renting is putting money into someone else's investment.

Step 7

Avoid using credit cards. If you have to for major expenses, use them as sparingly as possible. Also, be sure to shop for a credit card that has a low interest rate. If you can't pay up in full each month, the interest rate can creep up on you.

Step 8

Stay away from short cuts to wealth such as gambling or get rich quick schemes. The chances of losing or getting frustrated are much higher than success. You just end up throwing your money away.

Step 9

Seek a financial adviser to help you plan your finances and investments.