Your money is an important aspect of your life. The amount of money you have can determine what you do, where you go and how you live on a daily basis. Learning how to manage money is, hence, an important step towards taking control of your life. To manage your money properly, you must first understand the source of your money and how you spend it.
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To be able to control your money efficiently, you have to cultivate some attitudes; the more you translate these attitudes to habits, the better you are with your money. You can develop effective money management habits by taking the following simple steps.
1. Set up a budget and most importantly, stick to it. The rule is to spend less than you earn. Having a budget helps you track your spending, i.e. you know what you spend money on, on a daily basis.
2. Understand the flow of your income: Know what you earn from your job or your business. Know your actual income. If you are a salary earner, your true income is you’re earning minus mandatory deductions such as tax, pensions and other statutory deductions required to be taken out at source by your employer.
3. Actively manage your bank account: Some people do not pay attention to what goes on with their bank accounts. Keep a record of all additions to your bank account and all that you have withdrawn from it either directly from the bank, checks or the electronic channels like ATM and POS terminals.
4. Start saving: You have a budget: you track your spending, and you are probably spending less than you earn; now it is time to begin to collect. You should have a savings account and once you received your monthly salary or earn income from your business, put away a portion of it in the savings account.
5. Invest: By investing part of your savings, you are getting your money to work for you. Set aside a portion of the money in your savings account for investment on a regular basis.
Managing your money effectively will help you take control of your life. If you manage your money properly, you become less anxious about your finances.
