Money Management Exercises

Managing your money helps you attain your financial goals.

Managing your money helps you attain your financial goals.

Managing money successfully demands lifelong habits regarding spending, saving and making financial goals. Whether you have a substantial nest egg, need to dig yourself out of debt or just want to have a deeper understanding of your finances, doing some basic money management exercises can help you attain monetary goals. Approach money management as a puzzle to solve and a positive experience, rather than a punishment to endure.

Study Cash Flow

The way money can disappear seems mystifying. Even if your income far exceeds your ongoing monthly bills and expenses, you may find that you come up short by the end of the month. In many cases, the daily expenditures are busting your budget. Tackle this problem by studying your cash flow. Switch to a cash-only system for a month or two. During this time, write down all spending in a notebook. At the end of the month, total your expenditures and analyze where you can cut back, such as switching from double lattes to a single Americano.

Create a Budget

Choose a budget plan that suits your goals and lifestyle. If you like facts and figures, use a budget worksheet to list all expenses, including irregular and annual expenses, and all income. Create totals and formulate monthly and yearly savings goals. If you need to count your pennies, try an envelope system in which you place dedicated cash for expenditures in labeled envelopes. If you cannot handle watching exact numbers, try automating your bill paying, savings transfers and investments.

Tackle Debt

If you have racked up significant high-interest debt, typically on credit cards, you require specific money management skills pertaining to debt. Examine all your ongoing debt and identify the one with the highest interest payments. Dedicate a specific sum from every paycheck that will drive down the principle on this card. In the meantime, make sure you meet all minimum balance requirements on your other ongoing debts. Once you have paid off the highest interest debt, move to the next one, and so on.

Plan for Chaos

Economists often refer to chaos theory, or the art of predicting the unpredictable, by looking at financial trends over time. You can accomplish the same feat by examining your finances from the previous months and year and determining how much money you need in an emergency fund to cover six months to one year of expenses. If you have paid off debt, use the same figure to slowly build this fund. Once you have an emergency fund, you can use the same figure to build a savings account for short-term and long-term monetary goals.

About the Author

Nina Makofsky has been a professional writer for more than 20 years. She specializes in art, pop culture, education, travel and theater. She currently serves as a Mexican correspondent for "Aishti Magazine," covering everything from folk art to urban trends. She holds a Bachelor of Arts in English from Mills College.

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