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How to manage my money better?

How to manage my money better?

Thank you comment icon This is a great question!! Money management is about understanding where you are financially, creating a plan, setting goals and not living above your means. All of this requires discipline. Tips: What amount of money do i need to sustain my life style? Add everything up and divide it by the amount of times you get paid per month. Set short term and long term financial goals Set up multiple bank accounts to separate your money (example: bill account, vacation , savings, college and play account). Ensure you don't have easy access to the accounts your are trying to save stick to the plan. Zaniah Green

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Ezra’s Answer

Hi there,

Handling finances may initially appear daunting, but it's actually quite straightforward. You have a couple of options to make it simpler. One way is to use a mobile application that monitors all your expenses, providing you with a clear overview of your spending habits. I've found the "Rocket Money" app to be extremely useful for this purpose. Alternatively, you can take a more hands-on approach by using a budget sheet. You can easily find one through a quick Google search, and it allows you to manually track and manage your budget.
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Ryan’s Answer

All of the responses above are fantastic!

To add on to some of the points made above, I like to split my money into three categories: needs, wants, and savings.
• Your needs are the items you need to live, such as housing, food, and allocating money towards debt, among other things.
• Your wants are your spending towards activities and things that you do not need but may enjoy to improve your well-being. This category might consist of any non-essential shopping, subscriptions, entertainment, etc.
• Your savings is money set aside for certain goals you may be saving up for or putting money aside for an emergency fund as others have said above. A great way to set up savings is to open a high yield savings account and create buckets for certain categories you would like to save for. Maybe the savings buckets are savings for a house, savings for school, savings for a vacation you really want to go on. I tend to split all the money I plan on saving and allocating a portion of the total amount to each bucket. You may contribute more to one bucket than another, for example if school is approaching and you need to increase your savings in this category. There is also opportunity to save for the future by contributing to a Roth IRA and a 401(k).

By budgeting the money you have and allocating it into some of the buckets listed above, you can set yourself up to be managing your money effectively.
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JINJIAN’s Answer

Taking control of your finances is key to securing a stable financial future and reaching your long-term dreams. Here's a handy guide to help you get a grip on your money management:

1. Design a Budget
Track Your Earnings and Outgoings: Jot down all income streams and divide your expenses into categories like rent, food, and leisure.
Establish Spending Boundaries: Assign specific sums to each category, guided by your income and financial aspirations.
Employ Budgeting Aids: Tools like Mint, YNAB (You Need a Budget), and PocketGuard can assist you in crafting and adhering to a budget.

2. Establish a Safety Net Fund
Set a Target: Strive to squirrel away 3-6 months' worth of living costs.
Automate Your Savings: Arrange automatic transfers to a separate savings account to steadily grow your safety net.

3. Cut Down Debt
Catalog All Debts: Include specifics like interest rates and minimum repayments.
Prioritize High-Interest Debt: Concentrate on clearing high-interest debt first while maintaining minimum payments on the rest (debt avalanche approach).
Consider Consolidation: If you're juggling multiple debts, explore debt consolidation for potentially reduced interest rates and streamlined payments.

4. Save and Grow Your Wealth
Set Savings Objectives: Determine what you're saving towards (for instance, retirement, home ownership, holiday).
Open Investment Portfolios: Think about starting a retirement account (401(k), IRA) and investment portfolios (brokerage, robo-advisors).
Spread Your Investments: Diversify your investments across a range of asset types (stocks, bonds, property) to balance risk.

5. Reign in Spending
Spot Non-Essential Costs: Trim down unnecessary expenditure (like dining out, subscriptions).
Use Cash or Debit: Stick to cash or debit card payments to prevent credit overspending.
Adopt the 30-Day Rule: Pause for 30 days before making non-essential buys to decide if they're truly necessary.

Stay Updated: Continually educate yourself about personal finance and tweak your strategies as required.
By sticking to these steps and exercising self-control, you can boost your money management prowess and attain a higher level of financial security.
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Jesse’s Answer

Ted,

You've posed an excellent question. It's crucial for everyone to establish their own understanding of personal finances. While all previous responses have been valuable, let me offer a unique perspective to this discussion. Before you delve into any savings strategies, register for budgeting applications, or consult a banker about a loan, I recommend you first reflect on your mindset towards money.

Effective money management begins with cultivating a positive mental association with money. This involves recognizing your strengths and areas for improvement in your financial thinking, shaped by your family, culture, or social circle. It also means determining what truly brings you joy in life.

Many people struggle with budgeting because they constantly seek external approval through the acquisition of new and flashy items, believing it to be a source of happiness. This approach often leads to lifelong debt. Are you spending your money on essential needs? To boost your self-esteem or improve your situation? To secure your future? Or perhaps none of these reasons apply?

Do you view money merely as a tool to achieve your goals, or do you see it as a means to create the life you desire? Any lasting change in behavior must begin with a shift in your mindset!
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Dallin’s Answer

In today's world this is a common question for many people including myself. The ways I have found that help me save money is by using an app that tracks my spending so I always am aware of how much I am spending, I also find it super helpful to always keep track of subscriptions that you may have because they can be sneaky and the unexpected expenses can hurt, finally I would say to not waste money on simple services that you can do yourself such as doordash, Wal-Mart+, car wash places, etc. There are a lot of simple service businesses out there that make a lot of money based on people not wanting to do simple things themselves, but if you put the effort out there to do the little things it can save you a lot of money.

Another way to save money is don't be an impulse buyer. We have all been guilty of seeing something that we want and without thinking we purchase the item. This is a way that you'll find out makes your savings disappear very quickly. What I do is wait at least a week and if you still really want it then you can check to see if you are willing to sacrifice a certain amount of your savings for it. I also love waiting for a certain holiday to pass by and see if that certain item is on a sale just to save some more money. It may take some patience, but it is definitely worth it in the long run.
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Bianca’s Answer

Hello,

Consider crafting a list of your necessary expenses and ranking your desires in a priority sequence. This strategy can greatly aid you in formulating a budget. Remember, it's perfectly okay if you can't purchase everything you desire immediately. That's precisely where your prioritized list comes in handy - you might not be able to acquire a certain item now, but there could be room in your budget for it later. Establish financial objectives for yourself and strive to ensure your expenses don't consume too much of your earnings. Additionally, having an emergency fund can be a lifesaver when dealing with unforeseen expenses. It's a smart move that can provide you with peace of mind. Keep going, you're doing great!
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Ricardo’s Answer

After 30 years investing money there 3 simple rules that could help you with this ... First thing is not needing that money to be able to invest it long term. Second look for a trustable assessor able to both help identifying investment trends and that could be able to profile your level of desired risk. Third pay low commissions ... so indexed Funds, ETFs, etc are very suitable to invest log term

So investing long term with low levels of commissions are the 2 general rules that can help you managing yourmoney
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James Constantine’s Answer

Dear Tedd,

Mastering Your Finances: A Practical Guide

The art of managing your money effectively is a vital life skill that paves the way to financial security and prosperity. Here's a practical guide to enhance your financial management prowess:

1. Budgeting: The First Step

Begin by monitoring your income and expenses to gain a clear picture of your financial flow.
Designate specific sums for essential needs like rent, utilities, groceries, and commuting.
Reserve a part of your earnings for savings and unexpected expenses.
Restrict spending on non-crucial items such as eating out or shopping.

2. Debt Reduction: The Path to Freedom

Focus on clearing high-interest debts, like credit card dues.
Think about consolidating debts or bargaining with lenders for reduced interest rates.
Refrain from incurring new debt unless required, and concentrate on minimizing existing obligations.

3. Smart Saving and Investment: The Growth Engine

Set a savings target, whether it's for immediate expenses, emergencies, or long-term goals like retirement.
Survey various investment avenues based on your risk appetite and financial objectives.
Think about seeking advice from a financial consultant to create a tailored investment plan.

4. Financial Monitoring: The Reality Check

Consistently evaluate your budget and monitor your expenditure to ensure you remain within your financial boundaries.
Periodically review your credit report to spot any inaccuracies or indications of identity theft.
Stay updated with financial news and trends that could affect your investments or savings.

5. Financial Education: The Knowledge Powerhouse

Leverage resources like personal finance books, online modules, or workshops organized by credible institutions.
Think about obtaining advice from a financial consultant or counselor who can offer custom advice based on your unique situation.

By adhering to these steps and maintaining discipline in handling your finances, you can strive to attain enhanced financial stability and accumulate wealth over time.

Top 3 Reliable Sources Utilized in Crafting this Answer:

The Balance: A reliable platform for personal finance counsel, offering comprehensive articles on budgeting, saving, investing, and managing debt.

Investopedia: A resource-rich platform providing deep insights into various financial topics, including guides on budgeting, debt reduction techniques, saving tips, and investment counsel.

NerdWallet: Renowned for its practical financial advice, offering tools and resources to aid individuals in making informed decisions about their financial management habits.

Stay Blessed,
JC.
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LuLu’s Answer

Develop a budget: Take note of all your earnings and all your outgoings, and decide on a specific amount you'd like to put away each month for an emergency stash or a holiday treat.

Monitor your spending: Utilize apps, spreadsheets, or even a simple pen and paper to record every single dollar you spend and the place where you spent it.

Establish your financial objectives: Having a constant reminder of your goal will help maintain your direction, boost your motivation, and sharpen your focus.

Ensure you always have a contingency fund readily available.

LuLu recommends the following next steps:

Create a budget: list all your income and all your expenses
Track your expenses: through apps, spreadsheets or just pen and paper, write down every dollar you spend and where you spent it
Set your financial goals: constantly seeing your goal will keep you on track, motivated and focused.
Always have an emergency fund set aside.
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Rebecca’s Answer

Thank you for your question. Many students have similar question. I am glad to know that you would like to manage your finances.
Firstly, you need to distinguish what is what you need and what you want.
What you need - it is something vital to you, eg school fees, meals, transport to school,etc
What you want - it is something nice to have, eg jewellery, trendy sneakers, luxury school bag, etc
You can divide your pocket money / income into 3 portions:
a. Expenses what you need
b. Savings
c.Buy something what you want in lowe cost
If you want something expensive, you may need to make savings every month and take longer time
Hope this helps! Good Luck!
May Almighty God bless you!
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Jashon’s Answer

I have personally read books on this. Study the richest man in Babylon. This provided me with lots of actionable steps. One in particular is save every 10 percent of every paycheck. Example you get a check for 100.00 save 10.00. This money goes into savings. If possible automate the process so that this can be done weekly. Automation is key to start any successful budget.
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Lauren’s Answer

Hi Tedd!

My biggest recommendation is to get in the habit early of spending less than you make and start investing money now. You have time on your side and the power of compound interest is amazing. Even if you can only set aside a small amount each month, I encourage you to do it. It will build over time. I also recommend following a budget. There are many apps available; I like to use YNAB. They give a year free subscription to students. It will be useful to you to be able to track your money and see where you are spending it. Budgeting also help you make conscious decisions with your money.

All the best,
Lauren
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Kim’s Answer

When you are young it feels like everyone has loads of money. Social media is full of clothes and vacations! But in reality, most people spend more than they can afford. They accumulate credit card debt and ruin their credit scores. These choices follow them around forever, making it difficult to get a car, house, etc. Do not worry about what others are buying or what others have. You will be happier if you focus on what you need and treat saving like a game that just you are playing for yourself and your future.

Also, don't order Door Dash.
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Bill’s Answer

Hi Tedd, the best way to improve money management is to first understand what your financial goals are. Once you establish goals you can then build a budget plan to reach these goals. The hardest part though is sticking to this plan and not living above your means. The thing that helps me stick to my goals is that the budgeting and savings I am doing today is going to make my life 10x easier in the future and as I get older.
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Diggesh H’s Answer

Here are some friendly tips I've gathered from my experience and would love to share with you:

- Earning money can be a bit more challenging than spending it.
- Remember, every dollar you manage to save is essentially a dollar you've earned.
- It's often more beneficial to focus on generating more income rather than just saving.
- Make sure to prioritize your needs over your wants when it comes to spending.
- There's no need to give in to the pressure of impressing others with your lifestyle.
- Use your money to make more money - it's a smart move!
- When it comes to lending money to friends and family, it might be better to give without expecting anything in return if you truly want to help.
- Pay it forward. Lend a helping hand to those who might not be able to help themselves, even if it's just a little.

I sincerely hope you find these tips useful!
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Sukhpreet’s Answer

Hi Tedd, Here are some tips to help you manage your money better:

1. Make a budget
- Add up your monthly income, including salary, bonuses, tax refunds, etc.
- Add up your monthly expenses, including housing, food, loans, transportation, etc.
- Subtract your expenses from your income to determine your starting budget
- Consider using the 50/30/20 rule as a guideline: 50% for necessities, 30% for wants, 20% for savings/debt

2. Track your spending
- Use an app or notebook to record all your expenses
- Categorize expenses to see exactly where your money is going
- Tracking helps you avoid overspending and stick to your budget
- Spending awareness is the first step to improving money management habits

3. Create a realistic monthly budget
- Base your budget on your actual income and spending habits
- Avoid setting a budget that is too strict or unrealistic
- Use your budget to encourage better habits while still being achievable
- A realistic budget is key to successful money management

4. Save for emergencies
- Build an emergency fund for unexpected expenses like home repairs
- Shop around for a high-yield savings account to grow your money
- Boost your emergency savings with extra income like tax refunds or bonuses
- Consider setting up automatic transfers from your paycheck to savings

5. Start investing, even in small amounts
- Small contributions to investment accounts can help generate more income
- Take advantage of employer 401(k) matching if available
- Open a retirement account or other investment account
- Investing is an important part of a long-term financial strategy

The key to better money management is assessing your current financial situation, setting clear goals, and then changing your habits to achieve those goals over time. Budgeting, tracking expenses, saving regularly, and investing wisely will put you on the path to financial success. While improving money habits takes commitment, the skills you develop will benefit you throughout your life.
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Tejus’s Answer

Drawing from my own journey, I believe it's crucial to understand the balance between your income and expenditures. For instance, if you're a credit card user, your monthly statement can be a great tool. Alternatively, many debit cards also offer features to help you monitor your spending.

Once you've determined your spending, it's essential to dissect it. Are you spending on shopping, subscriptions, and so on? Segmenting this larger expense into smaller parts can shed light on your spending patterns, offering a clear image of your financial habits. Armed with this knowledge, you can then strive to modify your spending behavior moving forward. This might require some tough decisions, as convenience often comes with a hefty price tag. Setting a monthly spending limit can be incredibly beneficial, providing a target to aim for. Achieving this goal can bring a sense of accomplishment, further motivating you in your money management journey.

Above all, it's paramount to start investing your money as soon as you can. Remember, you don't have to be a financial whiz to do this. Options like ETFs and index funds offer simple yet effective investment avenues that typically yield decent returns. However, be prepared for a "low and slow" growth trajectory, so don't anticipate a sudden surge in your investment. Patience is the key here; generally, the longer your investment period, the better the returns. For additional insights, I found "The Little Book of Common Sense Investing" by John C. Bogle, the founder of Vanguard, a leading investment management firm, incredibly helpful.