Managing finances, taking and keeping account of expenses and incomes, is a real task for many. Such people eventually wish that they had learnt the art of wise spending long back, perhaps in their school days. However, to some this is not a difficulty. They do it effortlessly.
Five golden rules for managing money daily are sketched out here. These can be followed by anyone who wants to be a daily money manager. Otherwise there’s the chance of falling into debt or just be living from paycheck to paycheck every month.
The rules for daily money management
- Make the first payment to yourself. Allocate a portion of your paycheck to yourself, so that you have reduced money in your checking account to pay out. If the money in your checking account is less, you will restrict your payouts and hence spend less.
- Make an estimate of your expenses and stick to it. Think twice before you make an additional expenditure on any item. Money once spent is gone and nothing can be done to retrace it.
- A Check book balance should be maintained so that you know where your expenses are standing. You can also compare your checkbook balance periodically with the bank statements. Your checkbook balance will tell you how much you hold in your account after outstanding payments and checks.
- Keep a cashbook to know your daily cash expenses and what balance you hold each day. If you take money directly out of the ATM and spend for the expenses then you will not have a record or know where your money has gone. All small amounts add up to a big one, whether it is for food or for other essentials, and over the weeks this can come up to a considerable big amount.
- As a golden rule avoid using plastic money. It may be convenient to make payments through your credit cards or debit cards. However, remember that these are all expenses that you make in a rush and you never pay heed to the totals. They just empty your pockets without your knowledge. Your credit card payments always cost you at least 15% to 30% more. Reward credit cards are the worst. They get you to pay for unwanted expenses. The money you save by not paying for such expenses will be more than the reward in the long run.
- For any person to have sound finances, he should be the daily money manager for himself.