The Kind Tips – Tips for Life, Study, Work and Entertainment – Top 5 Money Management Tips

Top 5 Money Management Tips

Top 5 Money Management Tips

The skill to manage your money in a proper way can make a difference between a financial success and a failure. Developing effective money management techniques can effectively help you avoid spending on unnecessary purchases and make sure you are saving adequate money for your retirement plan. Money management does require some discipline, and you might have to change some of your current habits as well.

1.      Manage your credit.

It is very easy for people to fall into the credit card trap with a “buy now, pay later” scenario. Unfortunately, if you overuse your credit, you may get yourself in a huge financial hole that you might never be able to get out of. Before using credit for anything, think twice about how much money is needed for household expenses and savings each month and figure out if you can afford to take on some extra debts.

2.      Prepare for retirement.

Some people start to plan for their retirement too late or depend strictly on the retirement benefits provided by Social Security. Instead, you need to prepare it as early as you can. If your employer provides a retirement vehicle like a 401(k) plan, you are recommended to set up automatic payroll deduction to put money into the account immediately when you have your paychecks. If a 401(k) plan is not eligible for you, you may consider setting up an IRA via a bank or an investment firm.

3.      Be a rational consumer.

Try to avoid impulse shopping, especially those on unnecessary goods. Some retail establishments display attractive advertisements to entice you to make purchase of goods that are not in your original plan. In order to avoid impulse shopping, rough out a shopping list containing items you need and just stick to the list. For frequently purchased items, buy in bulk to reduce the unit price if large storage space is available in your house.

4.      Track and record.

If sometimes you wonder where your money goes, that means you didn’t track and record your spending very well. Take some time to work out a budget so you will know exactly how much money is coming in and how much goes under each category such as food, utility, insurance and clothing. You will also have the chance to find the places where you can trim the cost and alter your spending habits, thus save the costs and put aside more money in your saving account.

5.      Set goals.

To better manage your finance, you should establish some financial goals in areas of expense reduction, eliminating debts and savings. Write the goals down and post them to places where you can easily see them as a visual reminder. The goals should be established in certain amount of money to be saved in different ranges such as short-term (1 year), mid-term (1 to 3 years), and long-term (5 year).

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