Ways to Manage Your Money

People need money to live, to buy food, clothes, shoes, to pay house rent, to travel from home to workplace, and etc. Where does the money come from? It comes from our income, our salary. And the money that we spent is expenses. If your expenses more way than your income, you spend more than you earn, so you live in red, beyond your means, and that means that you can not manage your money well. Here are some useful tips to manage your money.

Budgeting

You can do this budget in a worksheet that contains income you earn every month and list of bills and expenses that you have to pay. Separate the expenses in 3 categories: regular expenses, saving, and variable expenses. Regular expenses are: rent/mortgage, utilities (telephone, cable, gas, electricity), insurance, debt (including credit card), transportation, food/groceries, school tuition and supplies. Saving is a must (in my opinion), usually it is 15% to 20% from your income. Variable expenses are money that you spend for clothes, shoes, books, DVDs, movies, eating out/restaurants, gym.

Credit Card

It’s better to limit number of your credit cards you get. If you live alone, just limit it to 2 credit cards. For a couple (husband and wife), get one for the wife and one for the husband. Choose the credit card issuer wisely or get a credit card from the same bank that you have a account on, so it makes you easier to do payment and negotiate the interest rate or annual fee. Don’t spend more than you can afford to pay. I normally use my credit card to buy food/groceries, clothes, books, or eating in restaurant and I always limit my credit card usage to $ 100 per month. Try to pay the full amount of credit card bill when the statement coming, to avoid you from continuing debt.

Avoid Impulse Purchase

Impulse purchase is a habit that we have to avoid. Before making any purchase, it’s a good idea to consider whether or not the purchase is really necessary.  Avoid also the temptation to purchase luxury items that we can not afford and that’s not necessary. Remember, you are the one who control the money not money that control you.

Learning how to manage your money the right way is an important step toward taking control of your life.