What is money management, exactly? It’s a plan for your money so you can make the most of it. This plan typically involves budgeting and saving money, avoiding or reducing debt, and investing in your future.
If learning how to manage your money sounds intimidating or stressful, take it one step at a time. Below are money management tips to help you gain control and, more importantly, peace of mind.
Money management is essential whether you’re in debt or just juggling your household costs and here are some efficient ways to manage your finances.
Have a clear business plan
A business plan will establish where you are and where you want to get to over the next few years. It should detail how you will finance your business and its activities, what money you will need, and where it will come from – see write a business plan: step-by-step.
Monitor your financial position
You should regularly monitor the progress of your business. On a daily basis, you should know how much money you have in the bank, how many sales you’re making, and your stock levels. You should also review your position against the targets set in your business plan on a monthly basis – see cash flow management.
Money management is about more than making the math work out. It’s about adjusting your mindset, too.
Take a mental inventory of your current position.
- Are you consistently overspending?
- Do you have enough saved up to survive an unexpected expense?
- Do you live paycheck to paycheck?
- Do you feel overwhelmed by financial jargon?
Be honest with yourself about where your weaknesses lie. You might’ve made some missteps in the past, but you don’t have to continue on that path. Here’s how to manage your money now, while preparing for the future.
Find ways to save
As you pay more attention to your finances, you’ll likely find opportunities to save. Here’s how to save money, from tweaking daily habits, to negotiating bills, to making long-term changes.
Ideally, over time, saving money will become part of your lifestyle. If you want to learn more about saving money with coupons, freebies, and DIY hacks, check out our guide to frugal living.
You don’t need to make big changes to your lifestyle to save money. Cutting back on the little things you buy can make a big difference. Other ways to save include:
- Checking price comparison sites to see if you can switch to a cheaper energy supplier
- Switching to a cheaper supermarket to save money on food shopping and meals
- Cutting back on subscriptions such as broadband and digital TV packages
- Shop around for better deals on clothes
Use designated accounts for spending and savings
One way to make money management easier is to keep money designated for bills and budgeted expenses separate from your emergency fund. This will reduce the temptation to dip into it for nonemergencies. Saving for a house, vacation, or new car? Stash those funds in separate accounts so you can see progress toward each goal.
Get the right funding
It is essential that you choose the right type of finance for your business – each type of finance is designed to meet different needs. Smaller businesses usually rely more on business overdrafts and personal funding but this might not be the best kind of funding for your company – read business financing options – an overview.
The price of food, household bills, travel, and other living costs can increase over time. That’s why it’s important to regularly review your budget. That’ll help you spot areas in your spending where you can save money. It also means that your budget is a true reflection of your situation as it is right now.
It is always very stressful facing financial problems as a business, but there is help and advice available to help you tackle them before it gets too much to handle so seek professional advice as soon as possible.