One of the top three answers I get when I ask people what keeps them from achieving their goals is money. Some are stuck in a job they hate, but they are too scared to give up that source of income to do what they really love. Others feel they need more money than they have to live the life they want to live. So, let’s talk about some of the ways you can manage your money well to ensure that you don’t start using that as an excuse to not create a life you love.
Money is here to stay, and you have to have it to function in our society. If you are not taught to manage your money, it will manage you instead. You should have power over your money, not the other way around.
Movements, such as minimalism, that are circulating through our culture today tell me that people are ready to stop hustling for things that don’t matter, like material possessions. They are looking for freedom from their stuff, so they can focus on what matters.
People are ready to stop spending their lives chasing their tails to make enough money to support a lifestyle filled to the brim with stuff that ultimately brings no meaningful value to their lives.
They don’t want to get to the end of their lives and realize they missed out on what was truly important. They are tired of feeling stressed out, overwhelmed, and pressured to keep up with a certain standard of living for the sake of impressing others.
The truth is, you can make a lot of money or you can make a little, but if you don’t manage your money well, you will end up in trouble. It doesn’t matter how many possessions you do or don’t own, you can still feel burdened by the weight of money or lack thereof.
This will continue because money is necessary to live and money comes and goes. Managing your money requires constant vigilance or you can end up right where you started.
How to manage your money like a boss
There are so many things to learn about money, and we’ll get into more of those topics later. Today, I want to focus on five basic things to help you get control of your finances, so you can manage your money like a boss and use it to help you achieve your goals.
1 // Change your mindset
Before you can do anything with your money, you need to assess your attitude with regard to money. We all have certain beliefs about money that were ingrained into our minds as kids. Some of those beliefs are good, and some are not.
We have to begin to sort through those things and decide which thought processes we need to break in order to be successful with money. Money is a tool and should be viewed as such. It is the means to an end. It is not a source of happiness or a measurement of success.
Money is not something we are owed or deserve. It is something we earn or we create. It is a powerful tool that can be used for good or for evil. Money is not the root of evil. The love of money is the root of evil.
There is nothing wrong with possessing a lot of money. What matters is what you do with that money. You must be a good steward of the money you are given.
Think about some of the thoughts and feelings you have concerning money. Write them down and evaluate whether or not these feelings are having a positive or negative effect on the way you manage your money.
2 // Create a budget
A budget is a must if you want to manage your money well. Whether you have a little or a lot, you need to tell your money where to go each and every month. You have control over this whether you think so or not.
Are you living paycheck to paycheck or looking up at the end of the month wondering where all of your money went? Creating a budget will give you freedom from that feeling of helplessness.
A budget will show you where you are spending your money, which is quite an eye-opening experience. If you are new to budgeting, I suggest using one month to merely track how you spend your money.
At the end of each day or each week, take a look at your bank account and record your transactions into a spreadsheet, so you can begin to see how much money you actually spend on certain things.
Having a clear-cut picture of where your money is going will give you an idea of where you need to reign it in and will make starting a budget less overwhelming.
3 // Get out of debt
This is a tough one, especially if you were taught that credit is a good thing. If there is one thing I can promise you, debt is never a good thing. Necessary at times, maybe, but it can very easily spiral out of control.
Being in debt up to your eyeballs is never fun. Reducing the amount of money that you owe to other people is a major component to financial freedom. If you are spending money on credit, you are spending money that you don’t have. You are not in control in this scenario.
As I said earlier, the point is to tell your money where to go, not the other way around. Just because you can make the payment doesn’t mean you can afford the item you are purchasing.
And let me just tell you what happens when your identity gets stolen and you have used credit to make all of your significant purchases. You have no more buying power. End of story.
If most of the money you make goes to creditors, you need to cut up the credit cards now and make a plan to start paying off your debt.
4 // Stop spending
Once you start tracking where your money is going each month, you will get an idea of areas in which you need to stop spending so much money. It might even be beneficial to go on a spending freeze for a period of time until you get your budget under control.
A spending freeze involves spending money only on necessities and nothing else. Another good tactic if you are married is to check in with your spouse before you spend any money. Your spouse should do the same with you so you have a good system of checks and balances.
Spending more money than you make is a huge problem. This is where budgeting comes into play. There is nothing wrong with spending money if you spend it as planned. If you know you like to buy clothes, for instance, and you know you make enough money to spend in that area, budget a certain amount of money each month for clothing.
There is freedom in knowing you have the money to spend without worrying about whether or not you will be able to also pay your bills. If you find after tracking your spending for a month that you do not actually have enough money to spend on clothes, stop buying the clothes.
This will not last forever if you manage your money well, but you will never fix the problem if you do not stop spending more than you make.
5 // Start saving
Setting money aside in case of emergency is crucial to achieving financial freedom. I’m not talking about investing for the future. I’m talking about having a reserve of cash to dip into in case your car breaks down or your water heater stops working.
Bad things will happen, but they won’t seem so bad if you have the cash fork over in the event of an emergency. That’s why this is called an emergency fund.
This should be a savings account that can easily be accessed at a moment’s notice, but you should aim to have a certain amount in the account at all times. If you have to dip into the fund for an actual emergency, you need to start adding money back in until you get it back up to the desired amount.
An emergency is not, “I need a new dress to wear to a wedding.” That is something you need to include in your monthly budget. An emergency is the type of thing I mentioned earlier – an unexpected car repair or something of that nature.
Look for ways to save when tracking your spending habits and include a savings category in your monthly budget. Start small and work your way up if needed. Decide on an amount, such as $1000, and contribute what you can until you get to that amount.
If you want to raise the bar later because you’re really into saving money, go ahead and do so. It never hurts to have a little extra cash sitting in your savings account in case something goes wrong because it will.
Now it’s your turn
I hope you can see after reading this that financial freedom is within your reach. You just have to know where to start. These five things will give you the foundation you need to achieve your financial goals, which will give you the freedom you need to achieve your other goals.
- Change your mindset
- Create a budget
- Get out of debt
- Stop spending
- Start saving
Is money holding you back from achieving your goals? What questions do you have about managing your money?