The size of your income isn't as important as knowing how to manage it properly. Keeping yourself informed is the first step toward successful money management. If you keep track of your spending, don't overspend and pay your bills on time, you've got a good start on the task of managing your finances properly.
Stay Informed and Abreast of Current Trends
Inform yourself. Read the business section of the local newspaper. Follow a financial blog from a trusted expert. Check through the documents your financial institution gives you when you open any type of account, whether you're opening a basic checking account, investing in equities or closing on a mortgage. You cannot manage your finances if you don't understand them first.
Use Credit Cards Wisely
Credit cards are not evil if paid off on time and in full. Set up automatic monthly payments from your checking account so that you are not late on payments, and only charge as much as you can afford to pay off in full every month. Find a fee-free card that offers cash back or rewards like airline miles or hotel points. Credit card statements can be a useful tool for budget and tax planning.
Make a Budget and Stick To It
Making a budget can be eye-opening. If you sit down and take a look at where you money goes every day, you may find unexpected ways to cut back. Use your credit card statement as a budget-planning tool. Evaluate, for example, if you need a subscription to a movie provider if you already have a full array of premium cable channels and a DVR.
Keep Track of Expenses
Don't be afraid to use old fashioned pen and paper to track your expenses. A check log may seem backwards, but it is immediate, and if you write down transactions right away you're less likely to forget about them. Failing to record even one transaction could lead to bouncing a check, so don't take any chances. Tracking all of your expenses on a computer is valuable, but sometimes the computer isn't handy. It also never hurts to have a paper back-up.
Automate Savings and Payments
Save and invest your money with automated monthly payments. If your employer allows you to contribute to a retirement or savings account through a payroll deduction, enroll in the program and you'll save money without giving it a second thought. Set up an investment account with a financial services company that lets you make automatic purchases through your checking account. Avoid costly late fees by automating payments for utilities, rent checks and a variety of other bills through a checking account.
Don't Get More House than You Can Afford
Just because the bank approves you for one loan amount doesn't mean that you should buy a house for that amount. Many new home buyers make the mistake of thinking that the mortgage is their only home expense and fail to factor in property taxes, utilities, insurance, repairs and maintenance. First time home buyers may be shocked to find out that water is not free and that when an appliance breaks, the landlord is no longer just a call away. If you spend less than you qualify for, you'll have money leftover for expenses and improvements.
Annabella Gualdoni has written newsletters and reports for corporations and nonprofits since 1994. She is a real estate professional and also teaches subjects including international cooking and travel, dating/relationships and personal finance. Gualdoni has a Bachelor of Arts in international development from University of California, Berkeley, a Master of Arts in international relations from Boston University, and a Juris Doctor from Boston College Law School.