Stop wasting money and build savings by taking control. Money slips through our fingers like water because we don't grab hold of it and make it a tool. If we don't learn how to use it and make it grow, there are plenty of people out there who would love us to part with it for their benefit. So, take charge and follow all or some of these twenty tips to master the art of money management:
1. Determine your net worth. Add up your equity in properties and cars. How much do you have in savings and retirement accounts? Do you have any stocks and bonds or other paper assets? Include in your asset column the value of furnishings, jewelry, clothing, art, and other possessions. Now deduct any debts and mortgages.
2. Determine your monthly and yearly income after taxes.
3. Gather up your bills and set up a budget. Don't forget to include occasional expenditures such as yearly auto registration and professional licensure expenses which are usually every other year.
4. Subtract your necessary expenses from your monthly income to determine what is left over for savings and discretionary spending.
5. At the beginning of each pay period, put a portion of your earnings into savings. Everyone should have some money set aside to take care of unexpected emergencies. Ask yourself if you would have enough cash on hand to get you through if you lost your job. Even if you are able to collect unemployment, it may take some time before you receive the first check. Personal finance experts recommend having at least six month's earnings in a savings account.
6. Examine your current discretionary spending habits. What do you spend on entertainment, eating out, vacations, and gifts? Set up a budget for those types of expenses and try to keep them as minimal as possible. Do you spend money on dry cleaning services, pool service, having your car detailed, and so forth? Which of those services could you drop completely or reduce?
7. Look at last year's tax return. What can you do to increase your tax deductions? Can you make the maximum contribution to your IRA? If you are planning on purchasing a new car, do you know that you can get a tax deduction if you purchase an energy conserving car?
8. Check your credit score. Improving your credit score may reap benefits such as lower interest rates on credit cards and some other bills such as insurance.
9. If you have a home equity loan, you can deduct a portion or the entire amount of the interest portion. Also, the interest rates are low on home equity loans now. So you might consider consolidating some of your other debts such as credit card debt since you can't deduct the interest on those loans.
10. Plan for future purchases by saving now. Set aside a little money each month for Christmas gifts or that vacation so you won't be putting those expenses on a credit card. Put aside money for your child's college education by setting up a pre-paid tuition account.
11. If you have dependents, make sure you have life and disability insurance.
12. Look for ways money is being wasted in your home. Your power and light company can send someone out to assess your home and recommend improvements to cut down on electrical usage. Do some research and fiind a better cell phone plan. Many people today find they don't need a land line. Also, you might want to consider cutting back on your cable bill by going to a basic plan. Do you know you can watch many movies on your computer for free?
13. If you can't purchase a new car, save on gas by making sure your tires are properly inflated and that you get the oil changed as recommended. Check on line to find the cheapest gas prices near you and fill up in the morning. Avoid unnecessary car trips by planning your errands ahead of time. If possible, car pool with co-workers.
14. Before making any purchase, do a little research on line and check out sales. Join a club that allows you to make purchases at wholesale prices. Many stores offer loyalty programs that give benefits and discounts. Join them if you need their goods and services frequently and can use the benefits they offer.
15. Try to use just one credit card for all purchases. This makes bill paying less complicated, and you'll be less likely to have to pay multiple late fees.
16. Set up automatic bill pay for some of your regular bills to avoid late charges.
17. If you have the space, consider renting out a room or taking in a foreign exchange student.
18. Give up or cut down on a vice such as drinking or smoking.
19. Invest in your education so you can get a better paying job. Keep your resume up to date, network, and keep your ear to the ground for news of any opportunities.
20. Join an investment club where you can learn about investing while having to make only a small monthly investment. The knowledge you acquire can be then used to help grow your own personal investment portfolio and net worth.
As you work towards your savings goals, you will discover many ways to save money. Of course, the best way is to not spend it in the first place. But that's unrealistic, and it wouldn't make for a very enjoyable life. The important thing is to know what comes in and what goes out. This knowledge alone will help you gain better control over your finances.