There are many different ways to manage your money, but the key to choosing the best money management tools is to pick a system you'll actually be willing to use. If your money management tools are hard to understand, inconvenient, or time-consuming, you'll never stick with it long enough to get results. Personal finance is a lot like dieting in that you want to make the process as painless as possible for yourself.
The most basic of all money management tools is the pen and paper budget. With this approach, you're creating a list of your monthly bills to subtract from your monthly income. There are templates you can print from the Internet if you need some help getting started. Get receipts for all your discretionary expenses and enter the totals on a weekly basis to make sure you're staying on track.
People who follow the advice of personal finance guru Dave Ramsey often recommend a cash-based envelope system for money management. Those who are accustomed to using debit cards for the majority of their spending find an envelope system takes some getting used to, although the very visual demonstration of how you're spending your money often proves useful for those with a serious shopping problem. When using envelopes as money management tools, you have individual envelopes for categories such as food, clothing, gas, health care expenses, and family entertainment. When the cash from one envelope is gone, you're done spending for that category unless you can make adjustments to decrease your spending in other areas.
If you prefer a high-tech solution to keeping track of your cash, you can try using personal finance software to manage your money. Examples of popular money management software programs include Microsoft Money and Quicken. These programs do have a bit of a learning curve, but there are advanced features that can make the effort worth your time if you also want to track your investments, plan to reach long-term financial goals, or keep track of records for your home-based business.
For someone who is always on the go, but wants a convenient way to keep track of his spending, there are a number of money management tools available for the iPhone or BlackBerry. While many of these applications don't have all the features of Microsoft Money or Quicken, they offer the convenience of always having your financial data handy. If you're wondering whether you can really afford a particular purchase, being able to see all your budget information at a glance can be very helpful.