Have you ever found yourself stressed out and overwhelmed by your finances and living paycheck to paycheck? If you suck at managing your money and always running low on cash, then this article is for you. The truth is that being good with money doesn’t have to be complicated. To be good with money, you need to start making intentional decisions with money, have financial goals, and manage your money in ways that align with those financial goals. In this article, I will share with you 10 simple strategies to be good with money, take control of your finances, and live a better life.
If you’re ready to ditch your financial stress and start living your best life, keep reading.
1. Have the right mental attitude toward money
To be good with money, you first need to have the right mindset. This is because being good with money requires you to make intentional financial decisions and you cannot develop these habits when you don’t have the right attitude toward money. Some people think that money is the root of all evil. Others blame education for their financial failures. The truth is that being good with money has nothing to do with the quality of your education or the money myths you heard of your entire life.
Yes, having the basics of financial education is key to managing your finances. But, you don’t need a college degree to achieve this knowledge. Having a college degree won’t make you good with money either. This is because millions of people with higher education are having the same financial struggle as those who never set foot in school.
All you need to be good with money is the right mindset toward money. You need to be able to suppress your desire to own more or look rich. Many people go broke trying to look rich and impress people who don’t even care about them. These habits must stop if you want to be good with money. Instead of treating money as a weapon to fulfill your emotional desire, treat money as a tool you can use to change your life for good.
2. Understand your relationship with money
To truly be good with money, it’s important to understand your relationship with it. What do you think about money? Do you see it as a tool to help you achieve your goals, or do you view it as a source of stress and anxiety? Are you one of those people who can’t wait to spend the next paycheck? What is the first thing that comes to mind when someone mentions money? Take some time to reflect on your attitudes toward money and how it may be impacting your financial decisions.
3. Track your expenses through budgeting
One way to gain a better understanding of your relationship with money is to track your expenses through budgeting. If there is any tool out there to help you be good with money, it is a budget. Being good with money requires understanding it and how you utilize it once it reaches your hands. Knowing what you buy, why you buy it, and the kinds of decisions that lead to such a purchase is crucial to making you better with money. This is where a budget comes in.
A budget helps you see where your money is going each month and allows you to identify areas where you may be overspending or could cut back.
By being more mindful of your spending habits, you can make more intentional choices with your money and feel more in control of your finances. This is because being good with money is reflected by the financial decisions you make. So, take the time to set up a budget and track your expenses. It’s a small step that can make a big difference in your financial well-being.
4. Cut back on unnecessary expenses
You cannot be good with money when you don’t understand how it is spent. Most successful people with money are those who make intentional spending decisions backed by a budget. If you are always running low on cash, it is due to unnecessary spending. Everything that moves catches your attention. So, you buy it. What if you can be good with money and stop such spending habits?
One crucial step to becoming better at spending your money is to use the information you gather from your budget to make better financial decisions. A budget is not just a list of incomes and expenses you have. Instead, a budget is a deeper illustration of your financial world and spending habits. If you are spending more money than you are earning, for example, your budget will be unbalanced. You can then, track your expenses and readjust your decisions to save more money.
By tracking your expenses through budgeting, you’ll be able to see where your money is going each month. This is important because it allows you to identify areas where you may be overspending or could cut back. With this knowledge, you can make more intentional financial choices with your money.
How to identify unnecessary expenses?
Identifying unnecessary expenses can be tricky, but with a little effort, it’s possible. Start by reviewing your monthly expenses and categorizing them into needs and wants. Needs are expenses that you cannot live without, such as rent or groceries. Wants are expenses that are not essential to your survival, such as eating out, buying new clothes, streaming services, etc. You can also use the 50-30-20 budgeting rule to help you identify your needs and wants and allocate your money to things you need the most.
Once you’ve identified your wants, take a closer look at them and see where you can cut back. For example, if you eat out multiple times a week, consider eating out once a week instead. Or, if you subscribe to multiple streaming services, consider canceling a few of them. These small changes can add up and help you save money in the long run.
By cutting back on unnecessary expenses, you’ll have more money to put toward your financial goals. This can include paying off debt, building an emergency fund, or investing in your future. So, take the time to identify your unnecessary expenses and make changes where you can.
You might also like: 20 clever ways to reduce expenses and increase savings
5. Get into the habit of saving
Getting into the habit of saving is another important step to being good with money and achieving financial security. By making saving a priority, you can build a foundation for a better financial future. Start by setting a savings goal that aligns with your financial goals, and make it a habit to put away a portion of every paycheck towards that goal. Consider automating your savings to make it easier and more consistent.
Remember that saving doesn’t have to be a huge sacrifice. Small changes, like making coffee at home instead of buying it out, can add up over time. And, when you’re tempted to make an impulse purchase, ask yourself if it aligns with your savings goal and if it’s worth sacrificing progress towards that goal. Very often, you will realize that impulse purchases do not contribute to anything of value in your life. It is just a temporary desire to own things that you don’t need.
By developing the habit of saving, you’ll not only achieve your financial goals but also gain a sense of control and security over your financial future.
You might also like: 10 effective ways to boost retirement savings
6. Invest in your future
To be good with money, you need to understand how to utilize the money to achieve your financial goals. To properly be good with money and take control of your finances, you need to start thinking about ways to make your money work for you. This is done through investing in your future.
Investing in your future means making smart choices with your money now, so you can reap the benefits later. This could mean investing in a retirement account, such as a 401(k) or individual retirement account (IRA), or even investing in stocks and mutual funds. If you like physical assets instead of digital ones, consider buying a rental property or farmland. The key to investing in your future is to start early and be consistent.
It’s important to educate yourself on the different investment options available and seek guidance from a financial advisor if needed. By investing in your future, you’re setting yourself up for long-term financial success and stability.
7. Avoid bad debt
Millions of people are struggling financially not because they don’t make enough but because they have accumulated impossible debts to pay off. Every penny they make gets taken by the bank. You cannot improve your financial situation and be good with money if you are living in such conditions.
For this reason, before you start investing and building your financial future, it’s important to ensure that you’re not weighed down by debt. Debt can hinder your progress and make it difficult to reach your financial goals. To avoid falling into debt, you must develop good financial habits such as creating a budget, living within your means, and using credit responsibly. These habits will help you stay on track and avoid overspending, which can easily lead to accumulating debt.
One effective way to avoid bad debt is by establishing an emergency fund. Having an emergency fund can help you cover unexpected expenses without having to rely on credit cards or loans. By setting aside a portion of your income every month, you can gradually build up a substantial emergency fund that can provide you with peace of mind and financial security.
Another way to avoid debt is to pay your bills on time. Late payments can lead to high interest charges and penalties, which can quickly add up and contribute to debt balance. Make sure you prioritize your bills and pay them on time, every month.
Overall, avoiding bad debt is crucial to being good with money and achieving financial stability and success. By developing good financial habits and making responsible choices with your money, you’ll be able to stay on track and achieve your financial goals.
8. Pay off your credit cards and loans every month
By paying off your credit cards every month, you’ll not only avoid accumulating credit card debt but also build a good credit score. A good credit score is essential in life and can help you in various ways, such as securing loans, getting approved for apartments, and even getting a job.
If you have a bunch of credit cards or other loans that are hard to track, set up automatic payments. This way, you’ll never miss a payment, and you won’t have to worry about incurring interest charges or late fees. Another way to stay on top of your credit card payments is to keep track of your spending. You can use apps, spreadsheets, or even a pen and paper to monitor your expenses and make sure you don’t overspend on your credit cards.
Finally, it’s essential to understand the difference between good debt and bad debt. Good debt is debt that helps you build wealth, such as a rental property loan. Bad debt, on the other hand, is debt that doesn’t bring you any value, such as credit card debt. By paying off your credit cards every month, you’ll avoid bad debt and be in a better position to take on good debt in the future. Again, what makes you good with money is the kind of decisions you make with your money. So, prioritize needs and minimize wants.
Related: Reasons why people struggle with debt
9. Use credit cards wisely
To be good with money and live a better financial life, it’s important to be responsible with credit cards. Credit cards can be a great tool for building credit, earning rewards, and providing a safety net in case of emergencies. However, if not used wisely, credit card debt can quickly spiral out of control.
To avoid getting into bad debt with credit cards, make sure to pay off the full balance every month. This will prevent interest charges from piling up and help you avoid unnecessary fees on the balance you carried over to the following month. Additionally, only use credit cards for purchases that you know you can afford to pay off.
Another way to use credit cards wisely is to take advantage of their rewards programs. Many credit cards offer cash-back or points systems that can be redeemed for travel, merchandise, or other rewards. However, make sure you’re not overspending just to earn rewards, as this can lead to debt.
By using credit cards responsibly, you’ll be able to build your credit history and potentially earn rewards while avoiding bad debt.
10. Make smart purchases
One of the key factors to being good with money and improving your financial situation is making smart purchases. Before making any big or small purchase, take the time to research and compare prices, read reviews, and evaluate your needs versus wants. Avoid impulse buying and make sure the item fits within your budget.
Another way to make smart purchases is to buy used or refurbished items instead of always buying new ones. You also need to avoid upgrading to new gadgets and electronics every time a new model is released. For example, you don’t need a new iPhone every year. This not only saves money but is also better for the environment. You can often find gently used items at thrift stores, online marketplaces, or garage sales.
By being mindful of your spending habits and making informed purchasing decisions, you can save money and live a better life.
11. Learn from the success secrets of the rich
If you want to be good with money, start investigating how successful people do it. Why are most people bad with money and a few are successful? It all comes down to the financial decisions we make and what we prioritize in life. To be good with money and become financially savvy, learn from the success secrets of the rich. Yes, successful people have businesses that earn them millions of dollars and can get away with taxes. But, all people who are good with money or rich people do not own businesses.
What successful people have in common, is their ability to make financially educated decisions. That is they prioritize their needs over their wants. Most self-made millionaires have budgets and track their expenses. And certainly, successful people live below their means.
One of the most significant lessons to take away is the importance of budgeting and tracking your expenses. Many wealthy individuals keep a close eye on their finances and have a clear understanding of where their money is going. Successful people often invest their money wisely, diversify their portfolios, and are always looking for new opportunities. Their ability to give up their money now so that they can benefit later is what makes successful people unique and good with money. The good news is that you can also learn these financial habits and reap the same rewards.
Additionally, many wealthy individuals have a strong work ethic and are not afraid to take risks. By working hard and pursuing your passions, you may be able to create opportunities for yourself that lead to financial success. However, it’s important to balance ambition with common sense and take calculated risks.
The bottom line
Being good with money is not an impossible challenge. You can easily become good with money by improving your relationship with it and making smart choices with your money. Also managing your money through budgeting, cutting back on unnecessary expenses, saving, investing, and avoiding bad debt is crucial to improving your financial success. Remember to take things step by step, be patient with yourself, and celebrate your progress.
