Some people have used financial management as a way out of debt. Most people have used it to improve their financial situation. The reason for managing money wisely is not really important as long as you are doing it. Regardless of your situation in life, it will help you take your money to the next level.
Take the following 5 steps into consideration and learn how to spend your money wisely…
Create a budget. On a basic level, a budget is simply a plan for your money. If you know your expected income next month, right that number down. Then start applying that money to different things. Start with taxes (if it isn’t already taken out), giving, and savings. Then move to basic necessities: housing, food, insurance, utilities, transportation. Finally, apply the rest of your income to other things you need or want.
Put future spending on a calendar. Pull out a calendar and look at your upcoming events and life changes. Will spending be necessary? Is so, then make a note of that and start building a list of future spending requirements. This is somewhat different from a monthly budget because it looks a bit further out. This does two things: (1) allows you to prepare by saving for the spending requirement, and (2) it allows you time to shop around for the best price and lock in the lowest rates.
Make a list of what you value. The best way to spend more wisely is to align your spensing with your values. Are you aware of your personal values? Take a moment to write down the things that are most important to you in life. Is it security for your family? Is it success in business? Is it helping others? You likely have a combination of values. Write these values down and then ask yourself this question: “am I spending my money on things I value?” Then ask, “am I spending my money on things that aren’t in my value system?” Doing this little exercise will give you some clarity and help to guide you into thinking consciously about your spending.
Buy generic label groceries.
You would be hard-pressed to find any difference between name-brand and generic labels in the grocery store. Don’t believe me? Grab a bottle of a name-brand peanut butter and the generic grocery store variety and compare the ingredients. Repeat this exercise with things like canned vegetables, boxes of pasta, cleaning products, and medicine. When you purchase name-brands, you are not paying for the product itself, but rather the idea behind the product. In other words: name brands are more expensive because they have higher marketing budgets (not higher quality).
Review your regular spending for things to eliminate. When was the last time you wrote down your list of monthly bills? Take a moment to do a thorough spending review now. List out all of your required spending for the month: this includes rent or mortgage, insurance, debt payments, utilities, services, etc. Is there anything on that list that you don’t need or want? It sounds absurd to ask such a question. However, I’ll be the first to admit that in the past there were things on my list of monthly expenses that I didn’t need or want anymore. Odds are you have one or two yourself. If you find something to eliminate, do it.