Managing money is a subject that all of us have had experience with in our lives, and a subject most of us have had to worry about as well. We’ve all either been in personal debt or know someone close to us who is. The 20th and 21st centuries have taught us to be consumers and the skills of the marketing gurus out there that have made us want things that we don’t really need.
The Habit!
We are creatures of habit, if we take on activities we do not normally do it can feel weird and unnatural, but as with any task we’ve had to learn, once we’ve done it a few times it becomes natural and easy. Breaking and making habits is hard psychologically, but I’m going to give you a little known secret to make creating any sort of habits easy.
** To make a habit, you only need to do something the same way 16 to 21 times, and then it will be set in your mind and become natural. ***
If you do something ONCE a day for 3 weeks, you will then do it naturally, doesn’t sound so hard does it?
Money Management – The Paper Way
Whilst we are in the technology age, some people still prefer to work with pen, paper, elbow greece and a filing cabinet, and I don’t blame them, in some cases it can be safer and easier to manage.
1) GET A RECEIPT
The biggest trick to making this work is to get into the habit of grabbing a receipt for every purchase that you ever make, even if you just discard the receipts when you get home for the first while, just make sure you get a copy.
A trick to making this easier to remember and habitual is to put an unused receipt over your Credit/Debit cards and money so before you remove them to make a purchase you are reminded to ask for a receipt.
2) GET A DIARY
No, I don’t want you to start writing down your feelings like you’re a teen again, for every purchase you make write down the purchase amount and the item/vendor it was purchased from. It is recommended that you only start doing this once getting a receipt is habitual.
3) BUY A SCRAP PAD
Once you’ve mastered the two steps above, I want you to start categorising your purchases (food, entertainment), and work out how much you spend on each category per month. This will shock you how much money you “waste” needlessly.
Money Management – The Electronic Way
1) MAKE ALL PURCHASES ON A CREDIT CARD
The biggest problem that I faced with financial management using this method is loose change! When you keep buying small purchases with cash often you won’t get a receipt, won’t remember and won’t have a record of the purchase. THESE ADD UP! You often will have a large gap in your finances because you simple don’t know where your money has gone due to small cash purchases. Make sure ALL payments are done on a Credit Card so when you finally do get your statement you know exactly HOW you’ve used your money.
2) RECORD PURCHASES
In order to truly understand how to manage your money you need to record all of your purchases and understand any trends in your spending you can potentially eliminate. The best program I can recommend is QuickBooks, which is a free to use relatively easy accounting program. It allows you to input all of your purchases into categories and run reports of where your money is being spent.
Thanks for taking the time to read this article and I hope you enjoyed the content, before I go I’m going to leave you with a little tip. I follow a variation of the techniques shown in this article but one thing I’ve learnt for my own soul, is to NEVER do this on holiday. Holidays are for family enjoyment, so do all of your budgeting before you go on holiday and set yourself X money per day, do not penny count when you’re buying things.
By: Matthew Kirkland
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