by Rana Williamson

Created on: March 12, 2009

Managing your money more efficiently starts with becoming conscious about how much you are spending, what you are buying, the degree of debt you carry, and the amount you save for the future. Start with these six basic steps to get your financial house in order.

1. Track expenses.

No one can efficiently manage their money if they do not know where it's going. Take 30 days and track every expenditure, placing the expenses in easy-to-understand categories like: Food, Utilities, and Auto. Don't worry that you're not doing enough to curb your spending. Science tells us that the act of observing changes that which is observed. The instant you start consciously paying attention, your spending habits will change.

2. Design a budget.

At the end of 30 days, use your totals against your income to devise a personal budget. Continue to track your expenses monthly and begin to compete against yourself to lower the numbers. Consciously look for areas to trim excess. Buy store brands instead of name brands. Start turning off lights and unplugging energy vampire devices like gadget chargers that continue to draw power whether they're doing their job or not. Review your cell phone plan, cable agreement, and any other service contract arrangement where you can negotiate lower rates. The more you compete against those budget numbers, the more avenues you will find to create improvement.

3. Prioritize.

Before you allocate funds for any other expense, make sure that the money for all absolute "must" bills is there. Don't wait until the bill is due. Write the check for the car payment, the electrical bill, the rent - for every absolute expense. It doesn't matter when you actually mail or deliver the payment. Commit the funds and then work with what you have left for the remainder of the month.

4. Resolve debt.

Tally your debts and work out a payment plan. Make sure that you cover the minimum payment on all credit cards and pick one on which to double the minimum. It can be either the one with the largest balance or the one with the largest annual percentage rate (which automatically makes it your most expensive card.) When one card is paid off, take the amount you were paying on that card and combine it with the amount for another card. Continue in this fashion until you've resolved your credit card (or other) debts.

5. Cultivate new income streams.

No one is safe with a single income stream. Be thankful if you have a steady job, but find a way to make extra money. Go to garage sales and learn how to market your "finds" online. Can your hobby generate extra income? For instance learning to sell photos as micro-stock online? If you're a diver can you get a Saturday afternoon job at the dive school or dive shop? Be creative. Any extra income is to your benefit.

6. Develop a savings plan.

As you cut expenses, begin to save, even if it's only $10 a month. One of the best ways to do this is to set up an automatic withdrawal from your checking account into a high yield savings account. (Look at offerings by online entities like ING. Just make sure the bank is FDIC insured.) As soon as possible, increase the amount you are setting aside each month. It is never too late to start saving.

By becoming consciously aware of where your money is going and taking charge to lower expenses and curb waste, you can control your finances and make your money work for, not against you.

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