Most people struggle with managing their money with some more than others. Being able to manage your money is key to building wealth. My parents taught me nothing about managing money. They would just toss the bills into the trash. The only time I saw anyone managing money growing up was when my Uncle introduced me to his notebook system. I struggled with money management for years before I was introduced to Dave Ramsey and from there I followed more and more people until I found the system that works for me. Here are the below basic steps I took when I was first learning to manage my money.
Check your Accounts Monthly
It is impossible to manage your money without knowing the status of it. Staying on top of your finances can be hard work; however, doing it correctly can help you succeed with building wealth. Making a standing appointment to check my bills, auto payments, credit card statements, bank accounts, retirement plans, and pay stubs once a month made a major difference in my financial life. Many of my friends check daily or weekly, but that was too much for me. Before the monthly checks, I was discovering overpayments of bills, being short on paychecks, and other billing mistakes. Analyzing my monthly bills, and other accounts is an important part of knowing where I stand financially. Thankfully, there are several apps that assist me with this.
I started this journey with Personal Capital. Personal Capital is a total money management app and website. It can help you track and build a budget, pay your bills, see your credit score, student loans, bank accounts, retirement plans, other loans, etc. Personal Capital provides reminders and notifications for everything from bill payments to unusual spending while allowing you to invest as well. After a while, I switched to Monarch Money which is a paid app that does everything that Personal Capital does minus the bill pay. One neat feature is that it tracks your recurring payments and gives you a monthly summary.
Build and Use a Budget
I was told for years that a budget is essential for your financial life, and for the longest I thought I had a budget. But, a budget is much more than a list of your bills. It is a plan for your money. Once, I started building my budget for the whole year (Thanks Scarlett from One Big Happy Life) my whole life changed. Most people look at budgets as a limitation or restriction of their own money. Budgets are seen as horrible things that are only for people who can’t manage their own money. But I assure you that having a budget can help you master your money and increase your wealth in the long run. Building the budget is only step one. In order for a budget to be successful, you have to execute and follow that budget on a consistent basis in order to see results.
Give yourself Some Discretionary Money
One way I have been able to remain on budget was to provide myself with some discretionary money otherwise known as personal spending. By allowing myself some personal spending money I finally stopped rebelling against my budget. Don’t get me wrong I’ve had to adjust my monthly personal spending a couple of times, but I’ve finally figured it out.
Contact HR Regarding Benefits
I read an article that stated that people leave benefits and money on the table with Human Resources. New employees sign up for the essential benefits offered through their job (medical, dental, vision, and retirement plans), but leave other valuable benefits on the table. Most people are not taking complete and full advantage of their retirement plan benefits, matching, and vesting. While others are completely unaware of their Flexing Spending Accounts (FSA), Health Saving Accounts (HSA), tuition reimbursement, gym membership reimbursement, etc. As a result, I made an appointment with my HR professional to ensure I was taking advantage of all the benefits allowable by me. Of course, I had left some serious benefits on the table and I made sure I enrolled myself in those as soon as I was able.
Save 10% of your Income
The 10% savings rule applies to retirement and emergency savings. Getting into the practice of saving 10% of your income, regularly and consistently, could lead to a significant increase in wealth. While I was saying towards retirement I had no emergency savings. So I made the decision to start saving just $50 a pI got a hold of my budget. Once that occurred, I realized I could save much more and did.
These items helped me so much with managing my money more effectively. So much so that I finally saved enough to purchase a house. Try it out for 30 days. It could be life changing.
Any other steps that can help you stop struggling with money? Leave a message in the comments.