Looking for some money management tips for beginners? Since money is a tricky subject, managing it and reaching financial autonomy can be a very challenging and daunting task. As independent powerful women, we bear sole responsibility for handling our finances so it’s especially important to make wise decisions. Earning money is not enough, to be truly empowered you need to learn how to manage your income and make it a stepping stone in your success journey If you’re a woman who’s flying solo, here are some tips for keeping your finances on the right track.
Keep a journal of your spendings
This might be quite an overwhelming task in the beginning, but as you grow into it you will quickly realize that it is the key to master your money management skills.
Journaling your transactions -whether through an app or a physical journal – will help you track down all your expenses and highlight your frequent and most expensive purchases: Therefore you would be able to pinpoint the areas where you spend more money and have a clear mind map of your financial decisions. This is one of the easiest money management tips for beginners, and you can so easily achieve this with the Give Yourself Credit journal.
The keyword here is to stay consistent and as things progress you will have a better insight of your spendings and derive a spending pattern.
Follow the 20-80 rule
When it comes to managing money, creating a savings fund is my first recommendation to avoid any bad surprises. By following the 20-80 rule, you will quickly find yourself building a strong basic savings account.
The concept is quite simple; you save 20% of your paycheck and spend the remaining 80%. This method will allow you to enjoy life without the stress of potential emergencies and fallbacks.
The process of budgeting should not be hard or complicated as it may sound; you just need to create a system that works for your needs. Before you start this exercise, you need to have a clear vision of your spending priorities. Once you decide what your priorities are, your budget should reflect them.
From the 80% allocated to your spendings, you will need to break down your income into percentages:
- The first one goes towards your needs and priorities (rent, groceries, transports,…)
- The second one goes towards paying debt and mortgage
- The third one goes to your wants and non-essentials (shopping, travels, …)
Keep in mind that these categories are not set in stone, it is your budget and you can choose to spend more on a category and less on another.
Limit your credit card purchases
With cash, your spending is limited to what you have in your possession. Credit cards, on the other hand, allow you to spend what you have available, providing you with additional purchasing power. Multiple studies have shown that we tend to spend 10-15% less money when using cash
My advice here would be to use cash for smaller purchases that don’t need credit card protection and use your credit card for larger or online transactions.
Be conscious while spending
This is an important trick to avoid compulsive online purchases. Especially in the actual context where we are tempted more than any time to buy unnecessary things. The first step before putting the item in the cart is to ask yourself “How will I use it?” and try giving at least three concrete answers about the potential use. In case you find it difficult to answer this question, give yourself some time to reflect on your purchase “Put in cart now, check-out later”.