How to Manage Money
Tips and techniques to handle and manage money more effectively and efficiently
This is a reprint of an article I wrote for Being Frugal a few days ago…
When I was about 14 years old, my uncle suddenly and unexpectedly went home to be with the Lord. He had meticulously taken care of the finances for their family and left my aunt on a very solid financial foundation. Obviously, this didn’t take away the pain of him being gone, but his preparation eliminated additional stress that would have been present without it.
It’s one of those things we all prefer not to think about, but it is always better to be prepared. My aunt is still reaping from what my uncle sowed by having his things in order.
My FLOP
Being impacted by my uncle’s premature death and wanting to do everything I can do to help my wife, I decided to create a system for keeping things organized.
It has been a work in progress over the last few years, but has evolved into a very helpful tool. Simply put, it is a single file or location for all your financial account details. I call it a FLOP (Financial Life on One Page). FLOP sounds a little cooler than FLOOP, but not much 
In adding to it over the last few years it has come to have three main purposes. The first being that it is a:
1. Balance Sheet
One of the best pieces of advice I received about 5 years ago, when I started my journey to clean up my finances was to keep a balance sheet. I didn’t really understand why at the time, but I did it anyway. I have updated it twice a year since I started it and it has been a great source of encouragement as I have fought to get out of debt.
The reason it has been such a source of encouragement is because a balance sheet not only takes into account the debt you have been paying off, but all of your good financial decisions. So increasing your savings, paying down debt, making wise purchases all will affect your balance sheet in a positive way.
Also, looking at the size of your debts or assets does not necessarily give an accurate report of your financial condition. To get a accurate picture of your financial situation you need a balance sheet to calculate your net worth. It is very easy to do and is just a big subtraction problem:
Assets - Liabilities = Net Worth
If you have never started a balance sheet, I recommend doing it. It is a simple way to track your financial progress as you move towards your goals. For most people it shouldn’t take more than an hour to gather up all your account balances and asset values.
And as with most things, you are either moving forward, or you are going backwards. If you are increasing your assets or minimizing debts your net worth should be growing. If your net worth is getting smaller, then it is an indication that you should re-evaluate how you are spending your money. And even if your situation is not very encouraging, it will force you to see the financial truth so you can make adjustments as needed.
How to create a balance sheet
- Use Excel, Google docs, or some other spreadsheet software.
- List every Asset you can possibly think of from cars to stocks to jewelry for the amount that you could quickly sell it for. (To save time, you can lump together smaller assets like “misc. household items”) Total these items up to get a subtotal of your assets.
- Below the Assets total, list every debt or liability that you have. Mortgages, credit cards, student loans, they all apply. Total your debts to get your liability total.
- Subtract your liability total from your asset total to get your Net Worth.
2. Organize all my login information
Another piece of good advice I got a few years back was to create an extremely unique login ID and use it for every website that I had an ID for. I followed the advice and it has helped, but it is not a fail-proof system. Some sites require your email address, some want more than 8 characters, some want less, etc. And in this day in age, where you just about need to login to open your refrigerator, it can be difficult keeping track of all your login information.
After adding all your accounts in the balance sheet section above, you should have all your account information listed already and you can just add a column to add your login for that company. If you use various passwords you could list them in another column as well, but consider using a password hint rather than the actual password. I still come back to my FLOP at least once a week to figure out a login that I forgot about.
3. Financial roadmap for my wife
The third and most important reason for my FLOP is for my wife. In most families, one person manages the finances and has a better understanding of the overall financial picture. I am that person in my family. Are you that person in yours?
If so, would your spouse (or other beneficiaries) know where to find your financial information? Insurance policies, bank accounts, investment accounts, safe deposit boxes?
I know for my personal situation I know a bit more about our financial details than my wife does. I use my FLOP to layout all of the pertinent details for my wife, if she ever needed them. It contains the name, phone number or web address of each institution, our account numbers for those institutions and any other pertinent info that may be needed.
I then burned the file to a CD and kept it in our safe. Every year or so I put a copy of the updated FLOP in there.
Losing a loved one is a terribly difficult process. Having a “roadmap” prepared in advance for your loved ones is a great way to help eliminate unnecessary stress.
If you are interested, you can download a copy of my template for my FLOP.
This article was included in the Carnival of Personal Finance
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I signed up with ING about 4 years ago and have had a great experience with them. They have been a model business that has worked very hard to satisfy and meet the changing needs of their customers. These are just a few of the ways they have helped me.
1. They are nuts about safety.
A study from the University of California, Berkeley was just published that measured occurrences of identity theft at the top banks. Guess who came out the winner. Yep, ING was rated the safest bank from that study. It is really no surprise to me, just going through their login process you become well aware that it would be a tough feat to hack into someone’s account.
2. Consistently good interest rates.
You may occasionally be able to find a better interest rate online, but ING consistently has good rates. And the rates still clobber any brick-and-mortar bank.
3. Free Bill Pay.
Yes, you can get free bill pay from just about anywhere. But, I have used a few different bill-payment services and theirs has been the easiest and quickest to use.
4. No overdraft charges
This is an a brilliant service that they offer. Most banks charge you about $30-$40 overdraft fee if you bounce a check. With ING, you don’t have to worry about that. Rather than charging that overdraft fee, they basically lend you the money at a competitive interest rate until you bring the balance back to $0. So if you are short for a couple days, it might cost you pennies rather than $30-$40.
5. They send paper checks for you
If you need to send a paper check to someone, you just go to their site and fill the check out like you normally would. They will then mail it to whomever you would like. How easy is that?
6. CDs with no minimum.
Not only do they have very competitive rates on their CDs, but they also have no minimums. This makes it very convenient to do a CD ladder and open up multiple CDs with different maturities to take advantage of the rates available. Many banks only offer good rates to customers with $10,000 or more. Not ING.
7. They make budgeting easy.
ING has been my budgeting tool of choice for the last few years. I am not sure if they created it to be a great way to budget or if it was an accident, but either way it is great. You can read more about how I budget with ING if you want.
8. They now own Sharebuilder.
I opened a Sharebuilder account about 5 years ago and currently have most of my stocks with them. They only charge $4 to purchase stocks, which was the best deal going at the time (Now Zecco offers free trades). I was happy with Sharebuilder before, but now that ING bought them, they have made some nice improvements to it as well. Lowered some fees, simplified some processes, improved the user experience, etc.
9. Great customer service.
I have called them about 5 times over the last 4 years that I have banked there and I have not had a bad experience. They still do NOT outsource their calls, so every time I have been able to speak to someone who speaks my language 
- that is a good thing. I have never been on hold more than a couple minutes and most times I have gotten someone right away.
- that is a good thing. I have never been on hold more than a couple minutes and most times I have gotten someone right away.10. Bonuses for friends.
One of the things that ING has become famous for has been their referral program. New users get $25 if they are referred to open an account, while the referrer gets $10. Not a bad deal. So of course I will send you a referral if you are interested. Just let me know.
What did I miss? Are there other features or other banks that you love?
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7 Things about money I learned over the 3 years that we have been married
1. Money issues need to be talked about
Many people try to avoid subjects (or really anything) they don’t like or are afraid of. You have to face the giants. If your finances are a mess, you have to face up to the truth. How can you expect to move a mountain that you refuse to admit exists?
2. Decide what you want to accomplish - together.
In order to succeed financially as a team, you have to have unity. You may not agree about everything, but find those areas that you are in agreement and shoot toward those goals. They will be a lot easier to attain if you are both putting focused energy towards them rather than pulling against each other for your own thing.
3. Realize that you balance each other out
This might not be the case for everyone, but for my wife and I, this was clearly one of the reasons God brought us together. We both bring different financial mindsets to the table and it keeps us in proper balance. If one is a spender and the other is a saver, I got news for you: it is probably by design. If my wife were just like me, we would be living an unbalanced life, probably saving too much for the future and focusing not enough on today. We both bring balance to each other’s life financially. In our case, we both had to make sacrifices to meet in the middle, but because of it we are living more in line with God’s best for us.
4. Support your spouse (yes, even if they have problems)
It is so critically important to cut each other some slack and allow your spouse an opportunity to grow. None of us are perfect and we all have areas to grow in. Part of the growing process involves making mistakes, so if your spouse isn’t being as financially disciplined as you are - cut him/her some slack. If you are constantly nagging your spouse about money (or anything for that matter) it doesn’t give them much incentive to change and it keeps them from being open with you about their failures. Being able to encourage each other when either one of you fails is very important.
5. A budget is necessary
Living on a budget is different for a single person than it is for a married couple. Let me say, I think everyone should use some sort of a budget, but especially married couples. The reason being is that a single person who doesn’t budget ultimately knows the responsibility for the bills, debt, consequences, etc. will fall on them. When a couple lives without a budget they both can be secretly thinking, “well I will let my spouse take care of it,” and things can fall through the cracks. Having a budget creates an unbiased system to hold both parties accountable for their actions.
6. Individual spending money is necessary
It is way too much of a hassle to have to discuss EVERY purchase you make. Each person needs a specific (and small) amount that they can spend however they choose - but just like allowance, no more when it is gone. It has worked well for us to make this cash solely for individual purchases - going out to eat, clothes, buying food for potluck at work, etc - misc things. You can look at how we manage our money, but basically 95% goes to our joint accounts to pay our bills, pay debt, common saving goals, etc. The remaining 5% gets divided between us for our individual interests.
7. Eliminate sources of strife
This was eye-opening to me. When we first got married, we paid for gas for our own car out of our individual spending money. It just seemed logical to me and seemed like it would work fine. We only had a limited amount of spending money for each of us and it would be enough to cover the gas for the week and other miscellaneous things we needed like I mentioned above.
The problem arose when in a very subtle way - we both seemed to be keeping a mental list of how often we drove places together in each other’s car. And of course, we both often thought that we were driving our car more than the other person. We really were not selfish in other areas of our marriage, but that one small thing was causing unnecessary strife. Now we pay for all of the gas out of a joint account - problem solved.
Have you learned any lessons about money and marriage that you could offer?
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Seth Godin, one of the premier marketing gurus of our time, recently wrote a post for “college grads or just about anyone.” I have read a few of Seth’s books, including a personal finance book he wrote, and have always had a lot of respect for him. He is a great marketer, but more importantly he really seems to be a honest guy trying to do the right thing. He has taken the long-term approach to doing things and it seems to have paid off for him.
Anyway, to his advice:
“Only borrow money to pay for things that increase in value.”
He goes on to say the three main things should be your business, your house, and your education. I love that he says this with the common thinking across our country that a car payment is something you can never escape. And that is just the beginning, then you get into loans on your living room furniture, and then - the worst - credit card debt.
I am excited to see that Seth is using his platform to get some valuable lessons out to his readers. It is one that people can never hear enough, hopefully they will heed his advice.
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Money Market accounts only allow six withdrawals per month
It doesn’t happen too often to me, but since I use my ING sub-accounts for budgeting I occasionally make more than six withdrawals per month. When this happens they send me a kind, but firm email informing me that if I make that mistake again they may be forced to close my account.
What you will get in your inbox from ING if you are bad…
Based on recent activity in your Orange Savings Account™, we want to remind you that you cannot make more than six withdrawals from your account each month. This is a federal regulation that all banks are required to follow for savings accounts like this one, so if this type of activity occurs more than three times in any 12-month period, we will have to close your account.
Since this is not the first time that you have made too many monthly withdrawals, we will be required to close your account if you do this again - and we don’t want that to happen!
So here’s what you can do to prevent your account from being closed:
Take a look at your statements or go to ingdirect.com and review your account activity. Keep track of how many times you transfer money out of your Orange Savings Account, including transfers to other ING DIRECT Accounts, and make sure you’re not making more than six withdrawals each month. Make one or two larger transactions rather than moving money numerous times. This will reduce the number of withdrawals you make each month.
Having worked closely with Money Market accounts earlier in my career I am very familiar with these restrictions. As the email mentions, the six withdrawal per month limit is a government restriction on the accounts, the bank itself can get in trouble for allowing customers to make more than six. Some banks will be more strict about enforcing this policy than others. But, if it comes down to it most banks will eventually close your account if you continue to abuse it.
I was frustrated about not being able to withdrawal my money once I reached this limit, and then the simple solution dawned on me…
The ING Hack to get around the six withdrawals
My wife and I budget for gifts and some months (i.e. December) we may be transferring a lot from the Gifts fund to our checking account. Once we reach five withdrawals for the Gifts account and we know we will need to do more that month, we simply transfer the remaining balance of that account to an unused (or a new) account. Then we just rename the new account “Gifts”. Viola, now we have another six withdrawals that we can make that month.
Renaming and opening new accounts (once you have opened the first one) takes about 20 seconds. So, really it is a very quick and easy process. I wouldn’t want to have to do it often, but it is better than getting your hand slapped or having your account closed.
A phone call to ING
I was also curious about what exactly they meant when they say they will, “close your account.” Did this mean just the individual savings account or did it mean the ING user account as a whole?
So, I called them and they confirmed that after exceeding the limit three times within 12 months, they will close the individual savings account. They did also mention that if a user does it multiple times for multiple accounts, they may consider removing that user’s profile from the system.
Just FYI.
Does anyone have any other ING helpful tricks or tips?
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Financial advice for college grads
The most recent Money Magazine had a few interesting articles worth commenting about. The first of which was one that contain advice from the pros for new college grads.
Clean up MySpace and Facebook pages
“. . . because potential employers will check them. One test: Make sure there’s nothing up there you wouldn’t want your grandmother to see.”
I think that is good advice for job-seekers and anyone really. Also, you may want to Google your name once in a while just to see what is showing up. Googling someone is the new form of background check that can provide a lot of detailed information. We are transitioning to a transparent society where not much can be hidden any longer - so do your best to watch what you type - no matter where you are online (and make sure you add me as a friend on Facebook).
Spending less than you earn
“Make it a habit to have more money coming in than going out. You may need to drive the clunker a bit longer or postpone that trip to Europe.”
Good advice. It is the simple 3rd grade math problem that is the ONLY way to wealth. If you can start the habit now, you will be in great shape for the rest of your life. If you don’t, you will have to face the music sometime and the longer you wait the more difficult it becomes.
Saving Money
“Sign up for your 401(k) the first day on the job; and put $25 a month in an ING Direct savings account as a cash cushion. Don’t let credit cards or Mom and Dad be your emergency fund.”
It is amazing how simple it can be to retire well off, if you start young.
Following this advice will pay huge dividends over the course of your life. Don’t be like so many who get into their 40’s and start wishing that they had started 20 years earlier. Take action now! You will thank yourself later.
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I found a good video from Dave Ramsey that goes over the basics of his plan for getting your finances in order. It is pretty funny to watch him try to squeeze everything from his book Total Money Makeover into a 5 minute video.
Enjoy!
http://www.youtube.com/watch?v=b–HwXE3064
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What is the best way to start a budget?
The first thing that anyone who wants to make a budget must do is to compare their income versus their expenses. The good thing is that it is quite easy to do.
To get started you can download this free Excel budgeting spreadsheet which will help you calculate how much you spend each month and compare it to your current income.
It’s too bad most of us never learned this in school and had to figure it out on our own - so here is the lesson that we should have learned in 5th grade:
Expenses > Income = Bad Expenses < Income = Good
And honestly, as simple as it sounds, that is the key to wealth. Anyone, and I mean anyone, who IS wealthy (I emphasize IS because I am not talking about people who appear to be wealthy, but who are actually in debt up to their eyeballs) spends LESS money than they earn. AKA - their expenses are less than their income.
The great news about this is that anyone can do this - no matter what their income level. If you can do it on a small income, then you can do it on a large income. If you can’t do it on a small income, then you won’t be able to do it on a large one either. Trust me!
If you don’t believe me, just ask all of the lottery winners who went bankrupt within years of winning millions of dollars.
Back to making our budget…
Regardless of how your expenses and income compare right now - get excited, because you can easily change it!! If it is bad you can make it so much better!! If it is good, you can still make it even better!! I will show you how later, but for now…
Let’s make a budget!
Did you calculate what your monthly expenses and income were? Were your expenses less than your income? If so, you are a rare breed who is in great shape, so just sit tight for a minute.
For everyone else, whose expenses exceeded your income - you are not alone. You actually have a lot of company. The problem is that it isn’t good company! Most of our debt-ridden society is in the same boat, but you are one of the bold ones who is jumping out of the debt boat!!
So, if your income is $1000 and your expenses are $1200, that means you spend an extra $200 each month that YOU DON’T HAVE!! What your job is now is to find out what you can get rid of or quit buying each month to save that $200. If you have no idea where to start you can check out these money saving tips or browse other money saving ideas.
I know, I know - this is the part that hurts. Just like pruning a bush - cutting back hurts, but ultimately you are going to yield so MUCH more fruit because of it!!
The goal here is to get your expenses and income to AT LEAST be equal. Once that is accomplished we can work on eliminating wasteful spending or cut other costs to bring the expenses below the income.
Now that you have calculated what your monthly income and expenses are we can start designing our budget. We will first discuss the less effective, but easier method for budgeting…
The world’s easiest budget
There are 2 simple rules to do a simple budget:
- You can’t spend more than you earn - carrying a balance on a credit card is not allowed.
- Money must go to the budget categories as soon you get paid.
The way it works:
Rather than having 10-20 different categories of items to be budgeted for you only focus on the 1-3 most important ones and let the rest of the chips fall where they will.
So, to do this you take your paycheck of say $1000 and right off the top you put the money to your main priorities. For many people this is tithing to their church, retirement savings, college savings for children, etc…
A sample of this would be:
$1000 (paycheck)
-$100 (tithe)
-$100 (retirement savings)
= $800 (for the rest of the bills and everything else)
It is absolutely critical that the money gets taken out FIRST for these few budgeted items. If not, I can almost guarantee that the full amount will not make it as intended.
I highly recommend making this process automatic by using direct deposit or some other form of automatic withdrawal. There is just something about human nature that has a hard time staying consistent with things like this.
Why do you think the U.S. government takes our taxes directly out of our paycheck, rather than coming to collect the full sum at the end of the year? It is the same principle - use it to your advantage.
Easy budget, but not very efficient
I think this budget is perfect for people who don’t want to budget. It is simple, doesn’t take up much time, and will help you reach some savings goals. That said, it is still inefficient and leaves the door wide open for inefficient and foolish spending.
I think it should be considered the “lazy man’s budget” - and you are not LAZY, you are willing to work to get your finances in order!! I know this because you are still reading. So, since you are NOT lazy and are hungry for more of a challenge, let’s look at how the pros budget.
The money saving budgeting method
Yes, this method takes a little bit more time and energy, but it also will provide you will long-term financial benefits if followed.
To do this we are just going to expand on the lazy man’s budget mentioned above. Rather than having just 1-3 categories of items budgeted for, we are going to create as many as we need to put a limit on our spending in all areas.
You can use the mentioned budget spreadsheet as a guide for tracking your progress. Try to account for every possible expense that you could run into. You will never be able to budget for every possible scenario, but the goal is to minimize surprise expenses. Inevitably, there will still be surprises from time to time - so I suggest creating a category for these surprises (or you can just use your emergency fund).
How to stick with your budget
The almost sure-fire way to make a budget that fails is to NOT budget for any fun stuff. I wrote about how budgeting should be fun and it is a necessary ingredient for success. You need to budget for clothing, entertainment, going out to dinner, or whatever else it is you love to do! The key is to do it in moderation and to set limits and abide by them.
The amazing thing is that by budgeting for fun stuff, it actually liberates you to spend money on these items. When you have money budgeted each month to buy clothes, the money is now sitting there waiting to be used for that assigned purpose. Suddenly you can go clothes shopping without feeling guilty!!
This is how budgeting truly becomes fun. When you have money sitting in the bank waiting to be spent. Or, even better: if you start budgeting for vacation and after a little while you have hundreds of dollars begging to be spent on a vacation!! You go on your trip and come back home and don’t owe any money to a credit card company - now that is how a budget becomes fun and what helps you stick with it!!
Other budget options
There are many ways to make a budget work. The key is to finding a system that works for you and sticking with it. This article has gone over a basic method of budgeting, but I also suggest you check out the envelope budgeting method, or the method that I use to budget with ING.
As far as paying for budget software I think it depends on the user. It is not a necessity by any means, but most software programs will make your life easier and save you time. It just depends on personal preference really.
That said, my favorite budgeting software tool that I have found is called Mvelopes Personal. They are basically like a virtual envelope system for budgeting. They have a very simple and intuitive method for budgeting that is one of the best out there. If you want more information you can Take a tour of Mvelopes Personal.
Another budgeting tool I found is called YNAB and you can find out more about it at YouNeedABudget.com. It is a very basic tool that will help keep your budget organized. I don’t like it as much as Mvelopes, but I think it is a little bit cheaper.
I would love to hear what has worked for you and what hasn’t. Let me know in the comments below…
Technorati Tags: make a budget, budgeting
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Debt Snowball: Dave Ramsey’s method for getting out of debt
Creating a debt snowball is Dave Ramsey’s preferred method of getting out of debt. The strength of using this method is that it focuses on the behavioral side of finance rather than the mathematical. Since we are not robots that always do exactly what we know we should, I recommend this method for most people.
These are the simple steps to snowball your debt…
- Create a list of all of your debts: credit cards, car loans, student loans, mortgages, etc…
- Next to each one write down the total balance owed.
- Re-order these from smallest to largest debts (use Excel or Google Docs to make this simpler.)
- Pay the minimum payment on all of the debts - except the smallest one.
- Put every extra dollar you can find towards paying off that smallest debt.
- Celebrate like crazy when you get that first debt paid off.
- Take the amount you were paying towards the first debt and put towards the next smallest debt. Do this until this one is paid off.
- Celebrate again!
- Continue this process until each one is paid off.
What you will find is that each time you pay off a debt, the “snowball” gets larger. Since you are taking the amount you used to pay off the first debt and putting it all + the minimum payment that you were already paying to the second together, you are making more of an impact towards that debt. Each time you pay off a debt, the snowball gets larger and more powerful - which is great, because it just increases the speed that each debt gets paid off.
The numbers don’t lie
If you are like most logical people out there (like me ) you are probably saying, “you could save more money by paying the highest interest rate cards off first.” You are right - calculators do not lie and they will give you the correct logical answer. Paying your credits cards off starting with the highest interest rate to the lowest is “mathematically” the best idea. But, let’s look it at from another angle:
If we DID what we knew we SHOULD do 100% of the time, using the mathematical approach would be best. But, we are emotional beings and even the most disciplined among us still have emotions and are affected by them.
Computers use logic 100% of the time. Humans do not. We were not created to. We make decisions based on our emotions. We get let down, we get encouraged, we feel motivated, we get scared, we feel hopeful, we feel like quitting. These are all emotional states that each one of us could feel on any given day!!
Knowing that we are emotional beings, the key is to use our emotions to our advantage. Just like jogging with the wind at your back, it is a nice little boost to use our emotions to give us a little edge. So, rather than tackling the debt like a math problem, we can tackle it in a way that will give us emotional boosts! After all, isn’t it better to get out of debt and spend an extra $100 in interest than to give up half way to our goal because we were discouraged?
Status Bars and Debt
Ever wonder why there are status bars showing you the progress of the item you are loading on your computer? It is to keep us from going crazy while waiting 10 minutes for the computer to do what we told it!! Even though that little bar moves slowly sometimes, it is encouraging because we know how much longer we have to endure the torture of waiting.
It is extremely DE-motivating when there is no end in sight. Without that “light at the end of the tunnel” it can be hard to keep going. That little bar that shows us the progress that we have made gives us hope. What if there were no status bars? Or what if you saw no progress on the bar until you got to the 70% loaded point? Would you keep waiting or would you reboot assuming it there was a problem?
When on the phone, have you ever been waiting on hold for 15 minutes wondering, “Did they forget about me? Should I wait it out? What if the never remember that I am on hold?” Do you cut your losses or wait it out having no idea when they will pick up, or if they ever will?
This is the advantage of using the snowball approach to paying down debt. If you focus on the highest interest rate, it could be months or even years before you reach that first milestone. Would you have the endurance to keep going that long without reaching that first milestone?
It is a wonderful feeling to be able to celebrate your first milestone - paying off the first credit card is a blast! Speaking from experience, I was fueled with motivation after reaching that first milestone. The fact is that most people are strengthened by seeing even a small goal accomplished. I love the snowball method because it focuses on reaching these small goals first and using them as motivation to keep going. Let me know how it works for you!
If you are having trouble organizing your debt snowball, you may want to consider Debt Snowball software.
Technorati Tags: Debt snowball, Dave Ramsey
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To the beginner…
Money management is not just for big corporations. It is for you and I as well. It doesn’t need to be labeled with terms like money management or budgeting. If you are where I was, it means nothing more than GETTING RID OF THE CHAOS.
If you are just beginning to get your financial life in order - I am excited for you! It is a fun journey and it is well-worth the effort. The peace that comes with knowing how much money you actually have and being in control of your spending is truly priceless.
Not too many years ago I was out of control financially with my maxxed out credit card and empty (and likely overdrawn) bank accounts, and not a dollar in savings. I decided that I was not going to live my life out of control and had to get things in order.
It did take a little work and a little time, but it is not much different than cleaning out a junk filled garage. It looks like an overwhelming task, but once you get going, it is easy to keep going. And once it is finished, it brings a sweet taste of satisfaction of a task accomplished.
Money Management
If you are looking for a way to get your bank accounts set up to to make bill-paying simpler I have laid out how I organize my bank accounts. And how I manage my bill payments will show you the steps that I take to keep my bills in order and pay them 2 times a month.
I also use a balance sheet to keep track of my financial life. You can also download a copy of my balance sheet template that I use.
Budgeting
If you are making the wise move to start a budget, I suggest reading why budgeting is like baking cookies to get some fun into your budgeting and these 4 quick tips to sticking with a budget.
Then you can learn some techniques with how to budget with the envelope system or how to budget with ING direct.
Saving Money
If you are having trouble spending too much money, then I suggest you read how to quit spending more money than you make or the trick to saving money.
If you are having trouble finding money to save read how to find money to save. One great way to find extra money to save, is to use the money from your raises at work. Read what to do with a raise for a more detailed analysis of what I do with each raise.
As you take your beginning steps with managing your money you will find that it is a lonely journey sometimes. Most people do not ever get their financial lives in order, and sometimes you can feel like you are not normal. Well, the truth is that in the U.S. “normal” means living paycheck to paycheck and in debt up to your eyeballs. Who wants to be normal anyway? Here are 16 ways to save money by not being “normal”
Building an Emergency Fund
One of the best tips for beginners is to build an emergency fund. Experts recommend anywhere from 1 month to 6 months of your expenses. It really depends on your personal situation.
Don’t be intimidated by the amount, just start saving, realize it may be a distant goal, and keep going and you will get there!! It is a very comforting feeling, knowing that if the car breaks down or the water heater breaks that you have money in reserve waiting for it.
If you are wondering if you need an emergency fund you can read “do I need an emergency fund?” and if you already have one and are looking for ways to make more money with it check out how to make more money with your emergency fund.
Saving for Retirement
So you want to retire? You mean you don’t actually want to work until you are 85? Good, me neither. The good news is that it is never too late to start saving for retirement. And, the earlier you start, the better off you will be. I have a quick and easy solution for twenty-somethings to retire well off.
You can find out more about saving for retirement with these 4 quick steps to retirement savings.
I think this should give you a good start at managing you money like a pro, keeping checking back (or get updates in your inbox) as I regularly aim to provide money management tips for beginners and veterans alike…
Veterans: Do you have any suggestions for beginners? What financial advice do you wish you would have received when you first started the journey?
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