6 Effective Money Management Tips
If all goes well, you will even be able to pay off the debt you have.
Good effective money management does not have to mean that you should rapidly change your lifestyle through extreme ways, but what it does mean, is that you will be able to live within your means to even save for short as well as long-term goals.
And let’s be honest, one of the most difficult situations that we face in life, especially living in an expensive country such as New Zealand is financial difficulties.
So the big question is: what can we do to change our ordinary and sometimes bad money management into effective money management?
Well, let’s take a look at some very useful and handy tips that if used correctly will help you to effectively manage your money the right way.
1. Setup a Budget
Setting up a good budget is not a difficult task at all.
This is a very good and probably the best way to start if you want to effectively manage your money and get on top of your finances. You can use a diary or even an online budget planner to keep track of all your income and expenses.
Your expenses usually include things like living costs, household bills, leisure expenses etc. If in the end, your expenses are higher than your monthly income, you might have a big problem. You then need to cut back on some expenses for example in the leisure category (things you want but don’t necessarily need right now).
Setting up a budget is something you need to do every month, and not just once. You might even say that budgeting is something that requires good discipline.
2. Use Cash instead of Credit
We all know this golden rule, but boy is it hard to follow.
It is so much easier and quicker to just swipe your card when you are out in town and want to buy something. But the problem is, that it is also just as easy to lose track of the money we spend every time we use a card.
One of the best ways that you will be able to effectively manage your money is by going back to the old-fashioned way of using cash.
A good idea to try is to withdraw a certain amount of cash for let’s say the following week. That way you will be able to monitor your spending for that week and know exactly where your money is going. It won’t be easy, but it might make you pay more attention to your spending habits and whether you might need to change them.
3. Create a Fund for Emergencies
The truth is that we must all have an emergency fund available.
Somewhere along the line, we have all learned that life is not always fair and most of the time under the worst circumstances, life gives you that much unexpected financial ‘blow” that you did not see coming.
This might be in the form of a geyser bursting overnight, your car breaking down on your long-planned road trip or even sickness and hospital bills.
By saving a little money every month, you will be able to avoid turning to credit card debt or even the need to get an emergency cash loan, just by using the money you have saved.
4. Pay Off Debt
If you want to effectively manage your money, you need to pay off your debt.
As mentioned previously, it does not matter where you live, whether it is in New Zealand, England or Australia, we all have debt.
Debt can be in the form of credit cards or cash loans.
The fastest way to clear your debts would be to look at the loans or cards that have the highest interest rates and to then try and pay them off first.
Just remember to not make the mistake and ignore the smaller debt.
While you might be focused on those with higher interest rates, it is still important to at least pay the minimum amount on the other debt each month. The quicker you can start paying off all your debt, the easier it will be to start saving extra money.
5. Avoid loans
Living costs differ from country to country and sometimes taking out a loan is unavoidable.
And besides most of us do have a home loan. With a home loan, you should always make sure that you have a reasonable interest rate.
If you are living in New Zealand and you are in a situation where you need cash quickly, there are various places that can help you for example Rapid Loans for personal loans. For emergency loans, you can visit Quick Cash and get your loan instantly approved. 247MoneyBox will assist you with short-term loans.
However, it is still best if you can avoid getting loans.
If possible rather try and borrow money from friends and family. It is not ideal, but there is a good chance that they won’t charge you with interest.
6. Set goals for yourself
It is always easier to accomplish something when you have a goal.
Whether you are saving money for a new car, that long-deserved holiday or even to further your studies, you need to have something to work towards.
If you don’t have a goal you are going to struggle to manage your money.
Some people even have S.M.A.R.T. Financial Goals that they set for themselves. It stands for: Specific, Measurable, Attainable, Reliable and Time-sensitive. In other words, by making sure that your goals have these characteristics, they become more effective.
You don’t have to set goals that are way out of your reach, rather for example say:
For the next month, instead of eating lunch at work every day, you will pack your own lunch to take with you to work. That way you know that you could save a specific amount of money at the end of that month.
Managing your money effectively takes discipline, determination and concentration.
If you have these skills and you follow the above tips, it is possible for all of us to effectively manage money and even in the end live a debt-free life.