If your idea of an effective cash management technique involves putting the bills in your wallet in numerical order, you probably need to do a bit more. Effective cash management is vital to ensuring a healthy financial future. Some tried-and-true techniques that don't necessarily involve arranging currency can be of help.
A budget is the cornerstone of any sound financial plan. Budgeting is simply the process of tracking your monthly expenses to determine how you're really spending your money. By making a list of monthly expenses you can discover areas where you can reduce or even eliminate spending and expenses. By preparing a budget, there's a good chance you will free up extra cash to use for other purposes, like investing.
Speaking of investing, there is no shortage of places where you can put that extra cash you uncovered by budgeting. An effective way to manage your investment dollars is to start a systematic program that allows you to invest with little pain and effort. If you have a 401(k) plan at work, for example, you can set it up so that money is automatically deducted from each paycheck and invested into the plan. You'll get used to the "missing" income and you'll be ensuring that you're saving for the future.
Credit can help you in times where you're a little short on cash or facing a financial emergency. Credit cards are probably the most common and easily accessible form of credit, but they must be used judiciously to avoid falling into debt. If you own a home, and have built up some equity, you can borrow against it in the form of an equity loan or line of credit to obtain needed cash at a relatively low interest rate.
Don't overlook the option of generating additional income as an effective cash management technique. There are many ways you can bring in more dollars, such as getting a second job, selling unwanted stuff on eBay or adjusting your tax withholding on your W-4 form to reduce the amount deducted from your paycheck. If you have a set of unique skills, you could put them to use by starting a small side business online or out of your home.