All About Money Management

Saving money is as good as making money

Money Saving Ideas - Great Ways To Save Money Every Month!

One of the best finance advisers around, Dave Ramsey. Highly recommended.

One of my favorite quotes:

The art is not in making money, but in keeping it. –Proverb

I remember when I was just turning 10 my parents decided it was time for me to learn the value of money and decided to give me a monthly allowance. Well, they really didn’t just give me an allowance I also had chores to do to earn it. Mowing the lawn and doing yard work, keeping my room clean (the toughest one for me), taking out the trash, and other little things around house. I was all in since I already did those things and got a dollar here or there. Now I would get a set amount and it had to last me the whole month.

But the kicker was I had to pay my own way from then on for movies, toys, etc. I was in the Cub Scouts at the time and earning Merit Badges usually involved some expense for materials or whatever. And it was kind of a Saturday tradition to go to the movies with friends so I needed to save for that and other little stuff like new streamers for my bike. But I was delighted in being able to make my own decisions and spend my money like I wanted (within reason, the snake I wanted to buy was nixed big time).

I really didn’t realize it at the time but it taught me quite a few lessons about managing my money. More than once I had an opportunity to go do something but there was not enough in my hiding place (that’s where I keep my allowance for about the first year) to cover it. I did quickly learn that I had better tuck away some of the money for unexpected expenses or opportunity to go to a carnival or other event.

Probably The Best Advice I Ever Got On Finances

My Dad used to tell me, “If you watch your nickels and dimes, the dollars will take care of themselves.” And I have to admit that turned out to be very true. So this whole allowance thing had both good and bad ramifications. And after a few months of squandering all my allowance in the first two weeks of the month, I learned that I’d better figure out some money saving ideas right when I got paid. I didn’t know it at the time but that was the first budget I ever created.

Another event brought up a whole new slant on managing my money around the second year of my allowance. I had two older sisters and one of them was going to a dance at school and wanted to buy fancy blouse for the occasion. But she was about $10 short to buy it so asked me to lend her the $10. I thought about it and said OK, but you have to pay me back $12.50 when you get your allowance. She had no problem with that and said OK. About 2 days later my Dad found out about are little arrangement. Yea, you know what’s coming. So he sat me down and explained that it was a good thing that I helped my sister out but that I was charging her way too much. He said 25% interest was too much to charge her. Of course I said “but it was her choice, I didn’t force her to do the deal” knowing that wasn’t going to save me. He then said he was going to let the deal stand so both of would learn a lesson but from now on 10% was the limit. It’s what many people call Predatory Lending these days and depending on the amount could even be illegal these days. A good example of Predatory Lending is often done by the Payday companies who charge outrageous interest on short term loans. You definitely should skip these places if at all possible.

My point is that one of the best tools anyone has in saving money is a budget. I was fortunate that my parents gave me an early look at how to better manage my money. This has helped me a lot although early on I still did manage to ignore some of the basic concepts (like buying a hotrod when I got out of the service comes to mind, but that’s a whole different story).

It’s Easy to Start A Budget

A budget is not some difficult mathematical challenge, just basic arithmetic. Take a sheet of paper (or do it on your phone or computer) and list out you income and expenses. Just doing the initial numbers will help you be more aware of where your money goes and how to better manage your expenses. Let’s say you make $2500 a month and your expenses come up to $2100 per month. So you should have $400 left over to save each month. But you don’t ever have $400 left over in the real world. The expenses you listed were like rent, a car payment, utilities, and etc. What you didn’t count are the random small expenses that are not a hard cost like ordering a pizza because you are too tired to cook or didn’t go to the grocery store, or whatever. And you also didn’t list the Starbucks coffee most days, or the pair of shoes that were on sale so you couldn’t resist. It’s little categories or expenses that can trip up any budget.

Now You Can Go Digital On Your Budget

And since we all live in a digital world these days there’s an app for that (I’ve been waiting for an excuse to use the phrase forever). And I highly recommend you do use an application because it will amaze you on how much money can slip through the cracks every month. Using one of these applications is both easy and records all your expense, random or not and show you some money saving ideas. And once that data is recorded you can see many aspects that you might not see doing it by hand. At the end of the month you can review your expenses and shine some light where you may be able to reduce them. Like two trips to the coffee shop (morning and afternoon), or that half off sale on your favorite whatever that you couldn’t pass up. The devil is always in the details and small expenses add up over a month.

The most popular and used three budget apps are all good and can get the job done. It really comes down to your preference on menus, functions, and your finances. You may find one or the other to better fit your needs and each does have one particular strength.

Mint is the leader in the budget applications for two very good reasons. First, it’s free because they make revenue from advertising and getting paid for referrals to financial services. It’s published by Intuit, who is one of the pioneers of financial applications and has years of experience in providing great applications for accounting, investing, tax filings, and personal finance. The best way I can describe Intuit is to say they are the Google of financial software.

When you start using the application it starts analyzing your particular expenses and offers advice to better manage your money. You can also automate payments if you want so it covers all the bases and even your credit score if you want. And their support is second to none. What more could you ask for?

Next up is PocketGuard, another free budget app. Pocketguard’s claim to fame is it’s geared toward giving you a constant state of your finances in regard to your spending habits. People who are trying to pay down debt like it since it has a lot of detail on percentages and estimations on time to pay off any debts. Because of this feature many use PocketGurad in addition to Mint. A lot of users use PocketGuard specifically for grouping expenses for future whatever. Like when you have to move and it’s across country you can dump all those expenses into one bucket to review and plan. PocketGuard is not as omnipresent as Mint but for drilling down into specifics it does a great job.

And the third choice is YNAB (You Need A Budget). YNAB is not free but they do have a 34 day free trial for you to see if you like it. It’s $6.99 per month but many users feel it’s more than worth it. It’s claim to fame is that the average user saves $600 a month by using the app. How? Well they have a methodology built in on many ways to both save and pay down debt for one. And it works by all accounts and the huge following they have, kind of reminds me of Apple users. And they offer 100% satisfaction so if it doesn’t work out for you all you need to do is request a refund.

I think the main goal is to find a way to create a good record of expenses and income. This allows you to see exactly where your money is coming from and where it is going to in a glance. Some might choose to do it digitally on an application, some may prefer doing it on an Excel Spreadsheet, or even pencil and paper. It’s not how you do it, it’s finding the easiest and best way and do it.

I will be honest with you, I still use a spreadsheet. The reason why is because way back when I started my own business I wanted a duo system. My personal stuff, and then my work related stuff. So my little spreadsheet does that, each month has two sections that lists revenue and expenses for both my business and my personal stuff at a glance. It’s not real fancy but quite effective for me. I keep every receipt and enter it under a chart of accounts (basic way to classify any income or expense). Every time I make a purchase or receive payment I throw the receipt in a box (I have a personal and business box) and enter in the info every few days (or weeks if I’m being lazy). And at the end of a month, quarter, or year it tallies all the information into a balance sheet. This saves me a ton of time doing my taxes and allows me to spot anything out of the ordinary. And if I ever get audited I have a great paper trail on all my financial data. It works for me so that’s all that counts.

The Bottom Line Is Do A Budget – Doesn’t Matter How

Keeping an accurate budget gives you a view of the way you use and receive your money. I know exactly what I spend on any area or category and where my income is from in any time period. Use whatever method is best or easiest for you. It helps a lot in planning, saving up for special occasions or expenses, or paying down any debt faster.

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