It is not a big fun to wake up one day and realize that you don’t have enough money left to use for the rest of the month. After having experienced it a couple of times I realized that something was wrong with me, no matter how much more I earned, money was never enough. So I started thinking about the core of the problem – bad money management skill.
I did some research and found out that there is a solution, for which some steps must be taken. It does not matter how much money we make or how we refuse ourselves some nice things in life, if we are not aware of where most of our money goes and what are our spending habits, we will not succeed in money management. I don’t think we should say no to things we like, we should enjoy our life and to do that we need to manage our earnings wisely. Bearing that in mind, let’s go through some of these steps:
Start with Monitoring
The first step in the money management process is measuring. We all know the expression what gets measured gets improved. This rule will work for your personal budget too. If you want to keep things under control, pay more attention to what you’re spending money on. At this moment, you don’t need to restrain yourself from buying something you’d normally buy. You just have to write down your expenses and keep them for later analysis. In fact, writing down your expenses will not be that difficult given the technology of the 21st century. You can easily do it with any Smartphone or an iPad (or an Android device) personal financing apps that are available out there (a big variety).
There are both free and paid solutions, such as:
• Spending Tracker
• Mint.com Personal Finance
• HomeBudget Lite
• Smart Budget
• Money for iPad Free
Go to the App store of your phone and look for either “budget” or “personal finance”. Application is good if it allows you to:
• Split your expenses in categories
• add expenses on specific dates
• Add your salary and any income you have
• Enter all costs in your local currency
• change the currency (optional, if you’re spending money in more than one currency)
One month head start
Good money management skill cannot be developed overnight; take your time and collect data; build your spending profile. Usually one month is enough to gather a sufficient amount of data, however, if your spending habits are difficult to predict then you might need more time. In the first month, make sure to enlist every expense you make into your chosen app. Use the right categories to be able to analyze this data later on. So again: dividing data into categories is vital for success. For example, you can divide your expenses into the following categories: rent, dining out, coffee, alcohol, food, bills, gas, education, entertainment, etc. Don’t forget to input your salary and any other earnings you’re making (e.g.: freelancing, securities, stocks).