Managing finances can seem an overwhelming task. Time to take a deep breath and engage a few simple tools to turn your finances from a stress-inducing foe into an empowering friend.
1. Follow your money's footprints. Your money isn't out wandering around on its own (unless you're making some strange investments), so tracking your spending is the first tool in your arsenal for figuring out the best path to financial freedom. There are a few ways to do this. Many smart phone apps allow you to track items you've bought and their costs. For a less high-tech way of tracking, grab a pen and a piece of paper or small notebook and jot down items and costs as you go. Get, and keep, receipts when you go shopping. At the end of the day, for the next 30 days, no matter how you're tracking your spending, take fifteen minutes and record it all in one place. This will give you a record of how you're spending, and provide a pathway to the next step.
3. Get real about your budget. When people start doing something that's good for them, whether it's diet, exercise, or finances, they tend to overcompensate. The fallout varies. With diet, it's the 9 p.m. ice cream binge. With exercise it's the 9 p.m. ice cream binge. With finances, it's the 9 p.m. ice cream binge cost. When you budget, make sure you budget in some fun. Of course, you'll want to prioritize things like bills, groceries, and other things higher on Maslow's hierarchy. But, by not taking into account fun, like movies, rester aunts, or subscriptions, you're setting yourself up for failure.
4. Pay attention! Pay attention to prices when you go shopping for anything, and always do some research first, and not just for big ticket items. It can be on things as small as beans that are on sale at one grocery store but not at another. Check out circulars, find ads online, and plan your assault for common goods as much as you would for large ones. "Deal of the Day" advertisements for your area can also be effective tools for finding cheap prices. Keep your eyes open!
5. Save, save, save! Most money managers recommend putting 10% of every paycheck into savings. That may sound daunting. It's good advice, but like an exercise routine, the point is to get into the habit. Start smaller, and ease your way into saving. "A penny saved is a penny earned" may be a cliché, but on the road to financial freedom, it's one to always keep in mind.
Just putting these tips into practice can move all the money talk that surrounds you into money practice that helps you keep your finances in check, your dreams in reach, and your wallet a little less empty.