Money management can be a daunting task simply because many of us are ill equipped with the knowledge and tools to do it ourselves. Unfortunately, we weren’t really taught in school how to balance a budget, pay off debt, and build up a savings fund. These things are all keys to living a great life where you aren’t controlled or weighed down by financial struggles. Many of us live paycheck to paycheck and always feel like we need more more more money but if we manage the money we do have in the most efficient way possible, we can continue living our lives and being able to do fun stuff. The goods news is that it’s NEVER too late to start. But how do you do it? Well, that’s what we’re going to get into today.

Whether you work with Golden State Partners already or not, the first step is to make a budget.

You should always take the time to sit down and get a budget in place and then regularly update it as you make progress in managing your finances. A budget is the key to controlling where your money goes once it comes in. A budget is NOT a way to forbid yourself from enjoying life so get that thought out of your head right now. First you need to sit down and determine how much money comes in and how much money goes out for bills. This is also why it’s important to keep track of how you spend your money. You want to make your income greater than your expenses each month so that you have some money leftover to work with and put towards debt or savings.

You can review your expenses for the past year on certain categories like car maintenance and groceries and then determine what amount you should designate for those costs on a monthly basis. If your balance after you minus your expenses from your income is negative, you need to keep trying to minimize your expenses. This means you might need to negotiate utility bills, cancel subscription services, and just do a better job of sticking to a budget with spending.

When you are sticking to your budget, it’s helpful to use a cash spending system so you can’t mindlessly swipe your card and disregard the limits you’ve set within your budget on different categories. It also makes you think twice about impulse purchases because it’s a lot more painful to hand over cold hard cash than it is to simply swipe a card and forget about it. I have an envelope system where I have different categories like clothing, fun, and car maintenance. It’s so fun to watch the money accumulate in my different envelopes so it’s there whenever I need it.

What is a budget?

A way to manage your money coming in and going out
A way to feel in control of your finances
A way to stay organized even when you have a hectic month

Remember, Golden State Partners can help you take control of your finances.

Deal with Debt

Once you have a budget in place, you can deal with your debt. This can be done by starting with your lowest debt and then paying the minimum on all other debts including your lowest but also taking any money left over in your budget each month and throwing that at the lowest debt. When the lowest debt is paid off, you move on to the next one and you apply the minimum payment for that debt plus the minimum from the debt you just paid off plus any extra from your budget. You keep repeating this process as you pay off your debts. The momentum you gain from it is very rewarding. If you struggle to have extra money to put towards your debt you have several options. You can sell things online to make some money, you can work overtime if your full time job allows it, you can get a side gig, or you can just work on cutting your expenses back so that you do have money leftover each month in your budget.

Build a Savings
When you have tackled your debt it’s time to move on to saving your money. You should be saving money before this, even if it’s just $10 a pay, but once your debt is paid off you can take the money that you used to throw at your debt and start putting that into a savings fund and watching it grow. In addition to your main savings fund, you can also put money away for specific goals like a new car, a vacation, or a new laptop you’ve been eyeing up for the last year. The rule is that you should never tap into your savings unless it’s a serious emergency and a new pair of shoes does not qualify as an emergency, unfortunately.

After you build a savings fund you’re comfortable with you can do more with your money like invest it, or actually spend some of your hard earned money on improvements to your home. But it doesn’t end there. Staying on top of your finances is a forever task. If you have a good system in place though it shouldn’t be hard to keep up. You should still always review your budget each month. You should also avoid using credit cards because if you aren’t careful you will just land yourself in more debt. Focus on paying off your home so that eventually you can really live with absolutely NO DEBT or loans.

You should continue to throw money into your savings and look into other ways to make money like investments. You should also always stay on top of a cash spending system. I’ve been using cash for years and years now and it’s a habit that’s so ingrained in me it’s awkward when I have to swipe my card somewhere. When you work hard to manage your finances it becomes a way of life and not so much a burden. It feels so good to be in control of your money, I promise you. There is always hard work in the beginning but that’s with anything really. Once you get the ball rolling it sort of comes naturally.