8 Money Management Tips That Could Make You Wealthier
There is one thing that virtually everyone wants, and that's money.
But in reality most people don't have to have millionaire or billionaire status to be happy, they just want to be comfortable and not live paycheck to paycheck – i.e. avoid being sad and it’s been proven that money can do that!
The key to success aside from winning the national lottery is money management.
Read on for eight money management tips that could help you achieve the financial success you’ve been dreaming of.
1. Don't Give in to Impulse Buying
A lot of us are guilty of impulse buying. Whether it’s shopping online or in store, it can be almost impossible to resist not purchasing a few extra items, but are they really necessary?
You are not obligated to spend money just because you have it available to you!
There are many ways to avoid impulse buying but a good trick is to walk away for 15 minutes and see if the buzz of making the purchase goes.
If it does you may now know you never really needed the item in the first place and you’ve saved aa few quid. If it still rankles then you are probably best to ‘cool off’ for 24 hours and then revisit it.
2. Investments Can Be Great
One thing you may want to consider is investing your money.
You may think your money will never run out, and it may not, but wouldn't you rather be safe than sorry?
When you invest your money, it can act as a safety net for your future. If you’re unsure of what to invest your money into and how to do it, seeking professional help can be a good start. In the UK there are numerous financial investment companies so research is the key.
For those of us with no experience the jargon can be a minefield. For example, there are wealth managers, stockbrokers, IFAs and Asset Managers but many use similar sounding brand names. For example, Fisher Investments UK is a wealth manager primarily servicing individual investors which is different from Newton Investment Management that primarily focuses on institutions and charities.
3. Distinguish Between Your Wants and Needs
For most people, the line between wants and needs can become blurry.
Your wants are things that you do not require to live, such as purchasing an entire wardrobe from the latest fashion trends or purchasing a new vehicle when you already have one or two.
As far as your needs are concerned, you may want to live comfortably, and that's okay. A nice house and car is fine. But make sure you don't go overboard with your spending.
So be sure to treat yourself sometimes but stay focused on paying the bill and covering other important costs or you could find yourself using credit sources and paying interest.
4. Focus on Long Term Goals
When you focus on your long term goals, not only will you be better prepared for the future, you can be more organised.
Your long term goals are what will carry you along the way.
As you achieve each long term goal, more things will begin to fall into place. Long term goals can be a minimum of one year and as long as five years – whatever is most suitable for you.
5. Diversify Your Sources of Income
A good practice to help achieve becoming financially stable is having more than one source of income.
The first thing you need to do is find a career and not a job.
You don't want to punch the clock for the rest of your life, so find a career that you enjoy that you can one day retire from with a smile.
Once you have landed your career, look for other sources of income, such as a hobby or two on the side.
Start putting the money you have left over from bills in a savings account and watch your money increase.
6. Create a Budget
One of the best things you can do to manage your money better is create a personal budget.
Create an ideal budget for your household expenses, including clothes and other things you may need throughout the month.
You want to be flexible with this budget, especially if you have children.
Create a budget for school shopping and clothes to ensure there are not too many mishaps and surprises.
Without a budget, you can spend all of your funds without realising it.
7. Create an Emergency Fund
Creating an emergency fund is more essential than many people think.
Emergencies can take place at any given time and one of the last things you want to be is unprepared.
Setting aside as little as £100 is a great start for an emergency fund or perhaps try to put away £10 a week in a savings account. There are plenty of savings accounts around now with decent interest rates but be sure to pick an account that allows quick access – after all it’s an emergency fund!
Being prepared for any unexpected problems is a vital asset for money management.
8. Keep Track of Your Expenses
Some people think tracking their expenditure is a little bit over the top, but you will be surprised at how much extra money you spend without noticing it. A coffee at Starbucks every work day for a year could cost you over £800!
Using a money management app or just a plain old spread sheet can be the difference between that holiday in Mauritius or a week in the back garden!
Keep track of your expenses and live below your means. These are both great tips for money management.
So, whether you’re currently struggling with appropriately managing your money or are just looking for some extra advice, by following these 8 tips you could soon be well on your way to financial stability and hopefully, success.
