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What are the Best Money Management Tips?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Personal money management is on the minds of many people today. While managing your resources is a good idea at any time, the task becomes especially important during rough economic times. If you are not sure how to take proper care of your finances, or want to fine tune your current processes, here are some basic money management tips that will help.

The effective management of money begins with the creation of a realistic budget. Far too many people tend to forget this important tool, choosing instead to simply pick a few bills to pay out of each paycheck as they come along, and hope that by the end of the month everything is paid. While this approach may work up to a point, it also makes it possible for a sizable amount of income to slip away unnoticed. Planning to and sticking with a budget makes it much easier to account for all income and correct spending habits that are essentially non-productive.

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Today, there are a number of electronic money management tools that can help you structure and stick to a budget. Consider investing in money management software that will track expenses, alert you when it is time to make a payment, and in general help you understand exactly where your money is going. There are free budgeting and financial management software packages that can be downloaded easily, and will provide a basic format that even people unaccustomed with using software can operate. Both the free and the fee-based tools usually come with money management tips and suggestions that will help you set up a budget that makes sense for your situation.

Proper management of credit accounts is also one of the more important money management tips. For any credit card in your possession, the goal should be to pay off the balance each month. This will prevent the accrual of finance charges, allowing that amount of money to be diverted to other areas of the budget. If you cannot pay off an outstanding balance, always pay more than the minimum due. Even if all you can manage is the minimum plus the projected interest that will accrue on the current balance, that will help to pay off the account much quicker.

Many people choose to live from one paycheck to the next. Little to no thought is given to creating a financial cushion. One of the best money management tips anyone can take to heart is the creation of an emergency household fund. The fund should be the equivalent of at least three months of your net income. Keep the funds in a savings account to earn a small amount of interest on the balance, while still keeping the funds within easy access. Creating and maintaining this fund makes it possible to continue meeting your obligations even if there is a loss of employment or some major medical emergency.

Shopping around for the best deals is also one of the most often overlooked money management tips. In addition to purchasing household items when they are on sale, make it a point to look around for better deals on credit card interest, mortgages, and different types of health insurance coverage. What was a good deal a few years ago may not be so good today. Taking the time to compare your current accounts with what is available could save you a considerable amount of money.

If you are simply not good with money, then you will need more assistance than basic money management tools will offer. When this is the case, speak with an expert in personal finance and financial planning. Experts can assess your circumstances and provide money management tips and guidance that are particularly relevant and help you establish and maintain financial stability.

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