Money Management Methods

Now that you know what you want and need, where your money comes from, and where it goes, you are ready to begin using a spending plan or budget. Here are two ways to manage it.

Method 1

At the beginning of the month, on a tablet or in a notebook, make a page that is titled "Income." On that page, list all the income you will have for the month. On the next page, write the title, "Expenses," and list all the things you know you will spend money for and how much you think you will spend. Then, as the month goes by, keep a record of all your expenditures. If you go over your estimate in one category, you may be able to adjust other categories, but remember that you only have so much money with which to work. At the end of the month, subtract your expenses from your income to determine how well you stuck to your budget. If you come up short of money at the end of the month, you will need to adjust your spending for the coming month. If you had money left over, put it in savings to meet one of your goals (such as a vacation or a new television) or to cover future emergencies.

Method 2

At the beginning of the month--or whenever you get your paycheck/money--divide the money to cover the items in your budget. Label an envelope or a coffee can for each item and put the amount of money you will need in that container. As the month goes by, take money as you need it. Put the receipts for your purchases into the proper container so you can determine how well you did at the end of the month. When all the money is gone from one container, you must stop spending or borrow money from another container. But if you borrow, be sure to consider carefully, or you may run out of money for something you really need. Keep a record of where you borrow so you can adjust your system for the coming month.

Whichever spending plan you choose to use, you may need to make revisions to better meet your family's life-style. If you find that expenses are more than the amount of money coming in, you must make some changes in the way you are spending your money. If you have money left at the end of the month, you will want to put it in savings to meet one of your family's goals or to cover future emergencies.

More Steps To Successful Money Management

How you spend your money today determines what you have six months from now, a year from now, five years from now, or in your lifetime. You control your financial destiny. You are responsible for the amount of money you earn and for the amount of money you spend.

Successful money management requires careful planning. It also requires self-discipline and the ability to say no to unnecessary spending. The ability to manage money has to be learned, developed, and practiced on a daily basis.

Getting Started: Six steps to help you become a successful money manager

1. Determine your goals
2. Calculate your living expenses
3. Estimate your income
4. Balance your income with your expenses
5. Develop a spending plan
6. Adjust your plan to changes

          Step 1