Are you confident in managing your money, or do you face difficulty planning how to spend and save your income? If it’s the latter, you’re certainly not alone!
In fact, according to a US survey, 58% of people feel that finances control their lives, from paying bills on time to building up savings. Luckily, it’s never too late to control your finances, as it only takes improving one thing – your money management.
Although managing your money takes time, effort, and commitment, it’s rewarding in the long run. So, here are some tips to help you master your money management skills:
- Set Clear Financial Goals
- Know How To Budget (Realistically)
- Track Your Spending
- Build An Emergency Fund
- Educate Yourself
- Put Your Money To Work
1. Set Clear Financial Goals
Big or small, it’s important to establish financial goals to effectively manage your money. Whether your goal is to start a retirement fund, pay off debt, or make a down payment for a home, setting clear financial objectives will motivate you to achieve them.
So, write down all your short-term and long-term financial goals, along with the steps you need to take to achieve each one. Once you’ve written down your financial plan, determine which you want to prioritize, along with how much money you’ll need to set aside each month to reach them in your given time frame.
It might be difficult to accomplish each goal right away, but, keep in mind that achieving one financial goal – like paying off debt – will allow you to pursue other goals more readily.
2. Know How To Budget (Realistically)
Before spending money, ask yourself if this spending aligns with the financial goals you’ve set for yourself. Now, one way to control the money going in and out of your is by practicing the best money management tool *jazz hands* – budgeting.
By creating a budget, you’re able to prioritize your expenses and savings based on your income, preventing you from overspending. So, if you’re spending more each month than what you’re receiving in income, then it’s time to closely examine where your money is going and determine which areas you can cut back on.
Even cutting an unnecessary expense of just AED 50 (about $13) or even AED 20 (about $5) out of your budget can lead to significant savings. Some things to consider cutting out include eating out for lunch, a forgotten entertainment subscription, or that daily coffee from Starbucks. Having said that, don’t limit yourself too much, and be sure to set a realistic budget, since too many restrictions may cause you to fall out of line!
If you want a basic budgeting rule of thumb, then using the 50-20-30 Budget Rule is an excellent way to start, as it distributes your paycheck into three categories: 50% for the essentials, 30% for non-essential purchases, and 20% for savings.
3. Track Your Spending
To ensure your budget is realistic, it’s worthwhile to track your spending. This will help you get an accurate picture of where your money is going and carefully evaluate your spending habits. Generally, this puts you in a better position to adjust your spending on an ongoing basis, so you can stick to your budget.
So, as tedious as it sounds, putting aside a few minutes a day to carry out a financial check-in can help you tremendously in the long run, as it will help you address the following: Are you within budget? Are you overspending? Is this purchase worth it? Will it keep you on track with your goals?
You could even use an app or spreadsheet to track whether your spending is in line with your budget. Remember, small purchases accumulate over time, so tracking will help you minimize making unnecessary splurges and save more money for the financial goals you’ve prioritized.
4. Build An Emergency Fund
If you don’t have an emergency fund, then now is the time to start building one, as planning for unexpected expenses will help you better manage your money. An emergency fund can be absolutely critical, especially when life throws you a sudden curveball in the form of large, stress-inducing expenses your way.
Typically these emergency expenses are accompanied by unforeseen events such as a medical bill, urgent home repair, or even a period of unemployment. That said, you never know when you might run into an emergency, but you can prepare for it. So, make it a priority to put money into your emergency fund with each and every paycheck until you’re able to save between three to six months of expenses.
However, if you’re financially capable of saving more to your emergency fund, then go ahead. All you have to do is set up a separate savings account and consistently deposit monthly increments. That means you won’t have to worry about covering finances when emergency strikes, which your future self will thank you for!
5. Educate Yourself
It also won’t hurt to educate yourself more on finances. The more you improve your financial literacy, the better you’ll be able to handle your personal finances, as your understanding will help you effectively manage your money.
There are numerous personal finance resources, from podcasts to books, all of which equip you with the knowledge you need to make sensible financial decisions. You could even take finance courses, attend workshops, watch videos and stay up-to-date by reading blogs and online articles.
6. Put Your Money To Work
While learning to manage your money is good, putting it to work is even better. Essentially, you create more income streams by making your money work for you. So, if your money is sitting in your bank account earning you next to nothing, you could invest some of your money (that you can afford to lose) and grow it!
If you aren’t sure where to get started, then consider owning a property in Dubai through online real estate investment platforms (REIPs), like SmartCrowd. Such REIPs are making it easier to invest in Dubai real estate through fractional ownership, for as little as AED 500. What’s great is that you can invest in Dubai properties and build a diversified portfolio to start earning a passive income from the comfort of your own home.
Key Takeaway
You don’t need to be a financial expert to manage your finances, but you do need to take the first step (baby steps, everyone!). By following the above money management tips, you’ll prevent your finances from spiraling out of control. The key to implementing these tips is to take it one step at a time, just like when a baby learns to walk.
By establishing clear financial goals, you’ll be able to budget effectively, track your spending, and gradually create an emergency fund. Remember to relentlessly educate yourself along the way and consider making your money work for you (though you should only invest money you can afford to lose). If you follow these tips diligently, you’ll be a money management master in no time!
Disclaimer: This blog is intended solely for educational purposes and shouldn’t be treated as financial advice. We suggest you always conduct thorough research, perform your own due diligence and consult with financial advisors to assess any real estate property against your own financial goals.
