I don’t know many people who start their adult life being good with money. More likely those who are good at managing their money get great guidance at an early age and something just clicks.
Most of us are guilty of wasting money for quite some time.
I didn’t start out life being great at managing my money. Like you I have had to work hard at learning how to be frugal and find out the hard way how to be good with money. Like many people it didn’t come naturally to me.
I don’t think money management comes naturally to most people which is a shame because learning how to save money and manage it is absolutely key to being able to choose how your financial life pans out.
If you can learn how to manage your money effectively early on in your adult life then just think about all those financial mistakes that you won’t make! Mistakes like:
- Paying for a holiday on your credit card
- Buying a brand new car when your old one works just fine, it’s just old
- Paying for Christmas on your credit card
- Living beyond your means and racking up debt
So what made managing my money click for me?
How did I get good at managing my money and stop making those financial mistakes?
And more importantly, what can you do to learn how to get good with your money?
7 Inspiring Tips On How To Be Good With Money
The first thing that happened was that I became a teenage single mum. Having a child brings responsibility into your life whether you like it or not.
Becoming responsible for another human being didn’t help me learn how to manage my money effectively overnight but it sowed the seeds.
Being on social security/welfare benefits without any credit cards or loans makes you learn how to budget your money whether you want to or not.
But I took out my first credit card when I went back to work after maternity leave and maxed my limit so money lesson not yet learned.
When my money situation got to the point that my 18 month old daughter only had 3 sets of day clothes, that was when I knew I couldn’t continue as I had been. She had so few clothes because I couldn’t afford to buy any more.
I knew getting into more debt wasn’t the answer so something had to change.
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1. I Changed My Viewpoint
I decided it wasn’t acceptable for my daughter to only have 3 changes of clothes. And if I was going to change that then I knew I needed to learn how to be good with money.
To learn how to save money so I could clothe my daughter and plan our financial future. For you to start the same process, this first step is crucial.
You need to change your money mindset.
You will never be really good with money if you don’t focus on how you view money deep down.
It might require some soul searching. You may have to try and unlearn some deep set money habits, but change is the key to your future wealth. And you can do it.
2. Created My First Budget
I know, I know, you don’t like budgets. But believe me, budgets do work if you make them to suit your circumstances.
My first budget wasn’t great but it was the first time I had actually looked at what I was getting paid and what my financial commitments were.
Looking at my money and planning it according to what I was paid was a massive first step forward.
For the first time I knew where I stood. It wasn’t great but my money was no longer an unknown.
Creating a budget that works for you is one of the best tips for managing your finances.
Don’t fight it, learn how to budget it. It will totally make a difference to how you deal with your money.
3. Gave Myself Fun Money
I gave myself some fun money each month. You have to be realistic when creating a budget that’s going to work for you long term.
If you budget every penny so there is nothing left for fun, for chocolate or an impromptu after work drink. Then you are budgeting for failure.
I knew I wouldn’t stick to a budget that left me no wiggle room for being human. Allocate a small amount of money that you can spend, guilt free, every month.
4. I Got Savvy With My Groceries
When I looked through my bills I was shocked at how much I spent on food. Given there was only me and a baby I was spending way too much on food.
The number one problem was that I wasn’t just buying groceries, I was buying takeaways. Far. Too. Often.
One week I went to the fish and chip shop 4 times in a row, seriously! Not healthy, not low cost and actually not that nice.
I changed how I shopped and concentrated on buying the best frugal foods for when you’re broke. I didn’t buy them all immediately as I wasn’t that great at cooking. Still aren’t.
Plan simple meals that you feel confident in cooking and batch cook them to save time and money.
5. I Stuck To Cash
I didn’t earn much but I had already maxed one credit card and was worried I wouldn’t be able to trust myself if I relied on debit and credit cards. So I went cash only for all my spending that wasn’t paid via direct debit.
Using the cash envelope system is so helpful when you need the extra focus of seeing the money you are spending. It’s that much harder to hand over your cash than to swipe or tap your card.
Try using the cash envelope system for 2 months for spending on things like:
- household items
- fun money
Once you feel back in control you can switch back to card payments, especially if you are able to earn rewards for using your cards.
6. Cut Expenses And Increase Income
Creating a budget, using cash and reducing your grocery bill only take you so far. I realized there was more I could do so went about cutting as many expenses as I could.
I switched to a monthly season ticket for work (why was I even buying weeklies?) and stopped buying unnecessary things like magazines.
Cutting your monthly expenses can free up money that you can use to pay off your debt or save for your future.
Go through all your monthly bills with a fine tooth comb and see what you can cut down on or get rid of completely.
Don’t just focus on cutting expenses though, look at how you can earn more money. Do you have a hobby that can make money?
There are some great work from home jobs out there which are perfect when home is where you need to be.
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7. Start Saving
Part of my money epiphany and the catalyst to changing my mindset was realising that my daughter was relying on me to protect her and provide for her.
To do that I needed to not only learn how to be good with money, I needed money in the bank.
I needed a rainy day fund to cover us for emergencies that I couldn’t plan for. And general savings for things I could and should plan for.
When you are on a mission to manage your money better you need to factor in savings as a priority. Savings help you sleep at night and stop your worrying about money.
They help you make plans for you future and stop life’s curve balls from derailing your plans. Savings are the bedrock for a solid financial future, start small and build your savings slowly.
Have a read of this post for why you need an emergency fund:
Learning How To Manage Money Effectively
Of course I didn’t become great at managing my money overnight. But knowing that I needed to do so helped me when I got things a bit wrong.
Managing your money effectively is something we all strive to do and if you follow these money management tips like I did you will make a different to your money situation.
Bonus Money Management Tips
If the 7 tips above aren’t comprehensive enough for you then how about the following bonus tips to help you really get on top of your money?
Follow the 30 Day Rule
The 30 day rule is a technique to help you plan your spending and ensure you don’t spend unnecessarily.
At it’s core the 30 day rule is basically a guideline where you wait 30 days before buying anything substantial that you have identified as wanting to buy.
It doesn’t work for groceries but people usually suggest using the rule for bigger ticket items, perhaps those costing over £100.
Save On Essential Bills
You can’t get rid of essential bills but you may well be able to reduce them. Check each bill and see if you can lower it.
Change utility company, ask for a reduced service from your cable provider (or get rid completely). Negotiate a better interest rate on your mortgage.
Look After My Bills is a fantastic new service in the UK that will automatically switch you to a new utility provider as your existing one becomes more expensive.
Not only is LAMB free to join, they keep checking the market and switch you again as your existing deal ends, so you know you will always be on the best deal. How fab is that?!
Track Your Spending
If you don’t already then tracking everything you spend is a great way to really understand what is happening to your money.
Create Money Goals
Most people work better and achieve more when they have targets to aim for. Give yourself targets and see how much better your money situation becomes. Creating money goals can spur you on to save more and earn more.
Sell Your Clutter
Earn some extra money by decluttering your home and selling your excess stuff. And of course it goes without saying, don’t replace it with new stuff!
Increase Your Finance Knowledge
Information is power as the saying goes. Take control of your knowledge by increasing your understanding of all things financial. That could be taking a couple of good personal finance books out of the library or subscribing to finance blogs.
Do what works for you but get the power in your hands.
I hope all of the above tips really help you in your quest to learn how to become good with money. Be reassured, it’s takes practice to get on top of your money but you absolutely can do it.