Let's face it, we all have much to learn when it comes to managing our money. Now, before you get all defensive, think about this: when was your last impulse buy? Okay, let me rephrase that, when was the last time you bought something that you didn't really need and probably won't use anytime soon or would stop using after 2 days when the novelty wears off? This goes for everyone and I'm not just talking about people who have bad credit. I'm talking about every single person who has the tendency to spend their hard-earned money on things that they temporarily want instead of things that they actually need.
Keep Track of All of Your Expenses
Some people keep track of only the big things: electricity, water, groceries, car lease payments, etc. But what about your everyday 6AM coffee, or that flaky afternoon croissant, or maybe you always drop a few coins in a wishing well? Yes, when I say "all of your expenses" I mean all of your expenses. Sometimes it's the little things that you're actually spending the most on. Those little cab rides to the airport, or that nightly cream puff, or even those few lagers with your mates every other night definitely adds to your monthly expenses.
Take Out Most, If Not, All Non-essential Expenses
Like I said, sometimes it's all the little things that pile up that makes up most of your spending. If you see that it's not an essential in your life, take it out or at least tone it down. If you're drinking 3 times a week, limit it to a weekend night. If you're spending $4 for a fancy coffee everyday, take that out and opt for home pressed coffee instead. Have you been paying for a monthly gym fee which you never use? C'mon, admit it, all those "meetings" and "errands" you needed to do in place of going to the gym are just excuses. Start jogging outside, if you really want some exercise in your life. It's free, and if you can commit to jogging everyday, then you can start considering that gym membership another go.
Track Your Expenses for the Essentials - Budget Everything!
When was the last time you checked your bills for any other reason than to pay for them? Try checking your electric bills for the last 6 months. What's the average? Are there any months when these shoot up? How much are you paying for health insurance, utilities, rent, water bills, etc? If you have a concrete idea on how much you really need to spend for every month, you get a good grasp of how much you need to earn or save to have those little luxuries, while leaving some for a rainy day.
Do you want to have your own house before you're 35? Maybe you want to attain a certain level of fitness in the next 60 days. When you establish concrete goals and are serious in your follow through, you make a choice every day towards that goal. Whether it's putting away 30% of your earnings, or skipping all the greasy takeaways and daily sugar filled sodas, you end up constantly making conscious decisions towards that end goal. More often than not, those decisions make your wallet and bank account really happy.
You don't need a personal accountant to help you manage your finances. Of course, professional help will make things easier for you. But if you're serious about having healthier financials, a little reading, some discipline, and these 4 tips are sure to make a difference. Good luck!