Being able to effectively manage money is something that a lot of people struggle with and why so many individuals live paycheck-to-paycheck. No, it isn’t impossible to manage money, but it comes down to drawing up a budget and maintaining it. Those that do adhere to their budgets tend to survive some of the financial hardships they encounter. They do this by ensuring they pay all of their bills on time and without leaning on credit as a crutch.

Those that don’t stick to the budget simply don’t do so because they have no idea where to start. The moment finances start to look “shaky,” they panic or simply give up and let a specific bill go past its due date, which can lead to even worse financial hardship in the future because of late fees, potential disconnections, and the fact the payment will have to be caught up. If now is not a good time to pay it, there won’t be a good time to have to double up on the payment in the coming weeks.

By implementing effective money management techniques, you can manage your money better so that you do not find yourself prioritizing your bills or turning to a credit card to keep the electricity on or food on the table. So here are 5 simple money management secrets that can turn your financial situation around for you:

1. Automate Your Savings

Even if you cannot deposit a lot of money at a time into your savings right now, it is important to start depositing something. Look for a high interest savings account with a local bank or credit union that will allow your money to grow as much as possible. You can also look online for savings accounts and money market accounts that suit your needs. Even if you are only able to deposit $5 or $10 out of your paycheck, start building this emergency account. As your financial situation improves, you will be able to deposit more.

Over time as you increase the amount you deposit, you will find that that is less money you are spending on things that you don’t need. What many individuals don’t realize is how much unnecessary spending they engage in. To prevent that spending from bleeding over into your savings account, do not get a debit card for the account. It is good to put roadblocks up for yourself so that you are discouraged from making withdrawals.

2. Keep A Written Record of Due Dates

Keep a chart or a list and place it on your refrigerator or another place where you will see it frequently. This will keep you from missing due dates and you will always know how much is due. This can be quite handy when determining how much money to put into your savings account. For instance, write down the amount of your check, subtract your bills from that amount, and then place a certain amount in your emergency savings and the rest in your pocket. Make sure you designate a minimum for your savings account and never drop below that amount no matter how much money is left after paying bills.

3. Get Your Way with Creditors

Believe it or not, you can negotiate with creditors on things such as due dates. When you control due dates, you are controlling how much money comes out of each paycheck. If all of your bills are coming out of one bi-weekly check and then hardly anything is coming out of the second, you may find there is not enough money left from the first check to deposit into savings. The second check has so much money left that it can be easy to engage in frivolous spending. If you arrange due dates in a way that your bills are split between the checks, you will be less likely to spend too much money and you will not have to worry about one check being completely consumed by bills.

4. Use the “Envelope System”

The Envelope System is rather simple in that you take your cash and you divide it up with envelopes. Yes, we live in the day and age where expenses are paid directly out of our checking accounts or we pay them online or over the phone with our debit cards. We are supposed to record these transactions in our account registers, but many of us don’t. It is time to start using those registers again and also withdrawing some cash from the account to better manage it.

When you withdraw cash from your account, place a little in an envelope for different things. One envelope can be for gasoline and another can be your spending money. You are only allowed to spend what is in the envelope. If you really want to get detailed about it, divide your spending money into “coffee fund” and/or “Friday night cash.” Doing this will keep you from handing over the debit card so freely when you are having a fun night out or are engaging in a little retail therapy.

5. Make Every Penny Count

If every penny doesn’t have a purpose, then it is a penny that shouldn’t be spent. Before you buy that new video game system that you may play twice in the next year, you do need to ask yourself how that expense will influence your financial goals. If it is an expense that is going to hurt your goals, then it is one that can be put off for a later date. This is not saying that you can’t spend your money on fun. Spending money on a little fun is a way that is going to keep you sane. In other words, it does have a purpose. However, spending money recreationally every night of the week may be excessive, but there is nothing wrong with a Saturday evening at the movies or a few drinks with friends. If you can justify the expense in a way that you do not feel guilty or the expense doesn’t feel necessary, then you will be okay. If it is an impulse expense that requires you to rework your budget, you know you need to back away.


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