Money Management Made Simple

For some of us, money management seems like scary, complex and complicated stuff.

Thus, we avoid it until one day, something serious happened and we have no way but were forced to face it.

Well, don’t wait till your money matter become that bad. Money management only requires some simple arithmetic skills and most importantly is being consistent.

Here, I share 5 simple money management skills which I am currently practising.

1. Spend less than you earn

We all know this is the most basic part of money management. If what you spend is less than what you earn, then you’re in the safe zone.

If you want to challenge yourself, try to overspend for one or two months, and then you’ll know how difficult it is to pay for the overspent amount.

You will know it will be painful to find that extra money to pay for the overspent amount.

So, make sure what you spend is less than what you earn.

2. Pay yourself first

Make sure you pay yourself about 10% of your monthly income. Then, deposit this 10% in a different savings account so that you can save it aside.

And promise yourself that you will not touch these savings unless it is an emergency. Make a short term or long term plan for these savings, such as a down payment for a car, a house, wedding or retirement.

You have to pay yourself first, otherwise, after you settle your monthly utilities, credit card, and other invoices, you will have nothing left. If you pay yourself first, then you’ll have to adjust the expenses with the remaining 90% of your salary.

You may find further sharing on my other post on why you need to pay yourself first and how to start.

3. Avoid bad debts

Bad debts are like credit card debts. I know it’s hard to overcome the temptation to spend using a credit card. But, you must remember, if you spend future money by swiping your credit cards, it will take you at least twice the effort to pay it back.

If you’ve started swiping the credit card habit, you will find that it’s hard to control that habit.

So, use the credit card wisely.

4. Grow your money

Once you’ve got some savings, learn to grow the money. Try with some investment products such as a robo-advisor or cryptocurrency.

Do not invest all in one go, but do it step by step to test the water. When you feel more comfortable and confident with your investment strategy, you can top up or diversify your investment.

And do not expect your money to grow overnight, but do allow for a few years before you can see the result.

5. Protect yourself and your wealth

You should know that all cars on the road must have insurance coverage. You are much more important than your car. So, make sure you have enough insurance coverage.

This is even more important if you have a family such as a wife, kids and other dependents. It’s now too common to hear serious sickness. With good coverage, at least it can lessen the family burden during a difficult time.

Final thoughts

Actually, money management is not that complex. It is much simpler than handling a bankruptcy situation.

Learn to know more about financial literacy and tackle the skills step by step, one at a time. Over the long run, you will be able to see the result.

photo credit: StockMonkeys.com via photopincc