Financial stability is a dream of many people, whether they are entrepreneurs or not. And in an economy as unpredictable as today, it is something of the utmost importance to know how to manage the money that we have in hand here and now.
Although we also know that it is not easy to plan expenses and save enough to build wealth, especially for those who want to start their own business.
Here are 21 simple tips on how to manage money, dedicated to those who want to have a healthier financial life, even without a huge budget.
If you adopt at least one of the following habits, you will see that, over time, your money will go further. So, let’s see the tips
1.Write down your fixed expenses
Fixed expenses are what we pay every month, such as rent, water, electricity, telephone, Internet, etc. It is important to note that you must include taxes in the list…. that you will not forget!
Having a record of fixed expenses is vital to recognize how much of the family revenue is left over every month to capitalize, save, or even distribute to rest and freedom.
Likewise, if you are an entrepreneur, you must also have control of the fixed expenses of your business, such as rent and production costs.
There are several ways to carry out this control, but to begin with, we recommend keeping a spreadsheet in Google Drive or in Excel, which will allow you to organize, update and save your data with great comfort, in addition to automating calculations formula systems.
2.Set aside at least 10% of your income each month
Before paying fixed expenses, try to set aside at least 10% of your income to invest. This will be a great way to easily understand how to manage money, in case you don’t have a lot of time to do some math.
If you earn a fixed monthly salary, this means that you must separate it from it. If you work as a freelancer, that percentage is separated from all your earnings for the month.
The objective here is not only to save money for a period until it can be spent on something extra but to apply that value so that it can pay interest and become an important asset in the future.
At first, it may be difficult to drop that 10%, but if you focus on the long-term result and manage to adapt your lifestyle without making great sacrifices, in fewer than a year you will start to see the first results.
3.Keep your expenses separate from those of your business
This proposal is valid for those who previously have a business or aim to start one. Many small and medium-sized entrepreneurs still find it problematic to separate private expenses from business expenses, which can lead to not only accruing losses.
This exercise is bad since you cannot express if your business is making an income, just because you will continuously be taking cash out of the box for private purposes.
The lack of capital will also prevent you from investing in improving processes and disclosure, which will only put a glass ceiling on the growth of your business.
And finally, mixing personal accounts with business accounts can give a false impression of “wealth” and motivate you to spend more than you really can at the time.
So, we will recommend that you have two separate accounts if you are an entrepreneur. The good news is that you can use the legal entity account to contract corporate plans for your company, such as health insurance, food cards, etc., which will also help you contain expenses.
4. Try as much as possible not to ask for money
Financing is a danger for small and medium businesses since they represent a long-term commitment and be disposed to charge high interest.
We know that it is not always possible to avoid them, since they are useful to attract resources in the initial phase of the project. But whenever you need to request financing, try to reduce the number of terms as much as possible, in addition to making a comparative study of the conditions specified by various financial institutions, to choose the lowest interest rate.
Remember that financing must also be included in your fixed expenses sheet throughout the term of your contract.
5.Pay off your debts as soon as possible
If you have already obtained a loan in your name, think about paying more installments at once to reduce the duration of the contract and the interest.
But beware, we are not saying that you should struggle yourself financially to pay off debts faster. The idea is to use money that is “leftover” to advance the installments. In other words, zero to touch the secure expenses or the cash movement of your business.
For example, you can reserve for this the money received for a specific job that you have done.
6.Study about investments
Investment is a way to make definite you don’t spend your money on something extra. But when we use the word “investment”, it may seem that we are talking about something that requires a lot of prior knowledge.
Do you also think like this? Well, it is exactly the opposite!
Anyone can invest, from people with a more conservative profile to those with a bolder one.
For this reason, we recommend that you study the different types of investment available in your country. Only then can you choose the one that best suits your profile. Also, you can talk to people who know about investments before making your decision.
Some types of investment are:
Savings accounts is successful everywhere it is easy to open Savings in most countries have a lower risk than any other type of investment.
That is why it is optional to make cash credits in a savings account to traditional investors, with a minor tolerance for risk.
Mutual funds or mutual funds collect money from different investors and then invest it in a variety of investments, such as stocks, bonds, etc.
This type of investment is suitable for those who can afford to invest in the long term.
Unlike the previous options, the stock market is recommended for investors with a bolder profile.
The value of shares can fluctuate extremely during the period when the market is open, so it is a model that carries risks.
Stock management demands a deeper understanding of how companies are performing, and ongoing monitoring of the stock market is crucial as well.
This way of managing money is quite interesting, but also risky, so before investing, you should learn a lot about the stock market.
7.Set financial goals
Before proceeding further, it is important to know the difference between goals and objectives. Although we are used to using these two words interchangeably, they can have certain differences in meaning:
The objectives represent what we want to achieve in the long term, while the goals, on the other hand, represent concrete, measurable and time-bound actions.
For example, if your goal is to increase the sales revenue of your business your goals, in turn, could be to double the number of transactions in the next six months, increase the average ticket of your customers by 50%, etc.
Take this opportunity to read our post on how to set goals for your business.
8.Pay in money whenever you can
This may sound technique, but any financial specialist will tell us that one of the most effective ways to manage money has to do with buying something only when we have the money to do so.
Therefore, paying in a single payment (or using a debit card, of course) is an excellent strategy to save money, since you avoid spending money that you don’t have.
Many shops around the world offer special offers and reductions for cash payments. This means that you can save money and pay less for a product or service.
9. Avoid using your credit card
Another important tip to know how to manage money is closely related to the previous point.
Does it mean that you should never use your credit card? Of course not! Credit cards signify great suitability for the customer, as well as actuality the most common online payment method.
Although our advice is that you try to avoid using it when you have the cash to pay for something. In many parts of the world, when you make payments on credit (or in installments), you end up paying interest, thus spending more than you would if you did it in cash.
10. Establish money limits on variable expenses
Anything that is not a fixed expense is a variable expense. In other words, a type of expense that in principle can be left for later. But we know that in practice people do not want to stop cheap themselves of small pleasures such as going out with friends, taking a trip or buying something that is not essential.
For these cases, we recommend setting a limit for them. Reserve a small amount of money for your relaxation activities.
We know your goal is to save money, but if you end up sacrificing too harshly, you may also end up giving up saving altogether.
For example, managing variable expenses in a balanced way can help to establish small rewards for when you achieve a goal or make a list of five items that you consider superfluous, trying to include at least one of them in your monthly budget.
11. Use financial management tools for money saving
If you are not used to working with spreadsheets and need simpler methods to control your expenses, there are a variety of financial management programs and applications to help you.
Some of them offer the option of uploading the payment vouchers made by card, following the bank movement, and even inserting reminders for the payment of accounts. Thus, you have control of everything that enters and leaves your account. For example, interest paid for late payments will no longer surprise you.
One of them is Wallet, a service-oriented and designed for those who do not have financial knowledge. It is about introducing the financial movements while we are labeling them correctly so that they are within the available categories. The result is a simple graph that tells us how we spend money.
Other options are Fin tonic, for iPhones, and Mint, for Android. Both are free applications that help you control your finances by keeping a record of all your transactions in one place.
To the list, we could add Monetarizing ‘, an application that follows the guidelines of the previous ones to control personal finances. The most interesting thing about this service is that in addition to being an application, it is a community of savers so that you can receive advice from other users to achieve the greater objective of adequately controlling money.
12. Look money for alternative sources of income
Today, there are many activities that you can do at home to earn money. An excellent example is Affiliate Marketing. With it, you promote other people’s products in exchange for commissions every time a sale is made through.
If you are creative and enjoy creating content, you can start a Youtube channel or a blog and write about something you like. You can also become a digital producer and create an online course to share your knowledge with other people.
To do any of these things, all you need is a computer (and at most a camera) with Internet access.
And if you have not identified with any of the professions that we suggest, you can also find in the following link other ways to supplement your income by working from home.
13. Define the money an average budget
For freelancers, it is quite a struggle when it comes to planning a budget, as they have no fixed income or benefits.
Our advice to avoid unpleasant surprises is to take an average of the income of the last months and identify the periods in which you earn more and less, and the effects of seasonality on your sales, such as memorial dates and events, periods of high season, and low, etc.
The ideal thing here is that your minimum income is enough to pay your fixed expenses. When you are in those months of high turnover in which you earn more than the annual average, invest the surplus, or save it to be able to face the months in which the turnover is naturally low.
14. Use the Internet to compare prices
do a speedy search for a product on the internet, you will realize that many different sites sell them at many different prices.
Therefore, every time you are about to make a purchase, look for the best price that fits your budget. After all, when it comes to saving money, price comparison pages are great, because every currency counts.
It is important to remember that for digital products, price is not the only thing to consider. The value they provide, the problems they help solve, and their true cost… it all needs to be accounted for.
15. Join credit card rewards programs
Rewards programs are also great for those who want to save and know how to better manage their money. In these programs, we are rewarded for each purchase made, obtaining points that can be exchanged for other products and services, such as airline tickets, for example, most credit card issuers offer rewards programs, and signing up is generally free.
There are also many cash rewards programs available, that is, where you can redeem points for cash instead of products.
16. Join subscription programs
Is there a product or service that you consider extra, but that you still consume frequently? So, you should consider joining a subscription program.
Through them, you can save more than if you bought the items separately, in addition to offering the obvious advantage of receiving the products directly to your home.
And when it comes to digital products, monthly subscription plans are often like member areas, virtual learning environments where learners can consume the materials made available by the vendor.
17. Buy second-hand products
With the growing trend towards minimalism and conscientious consumption, buying second-hand items is a way to help save the environment and also to learn how to manage your money by saving.
There are many second-hand stores anywhere in the world, for example, with high-quality clothes and shoes that are sold at a much lower price, with furniture, appliances, etc.
Online you can find a variety of products on websites on these platforms, users put the products up for sale and the sites act as intermediaries in the purchase process. The same happens in e-Bay although they also sell new products.
You can also join Facebook groups and trade products and services with other people.
18. Don’t ignore small expenses
Services that charge directly to your credit card, such as Uber or apps and sites that deliver food, can act as traps for those who want to save. That is because you spend money without realizing it and when the bill arrives surprises arrive.
That is why we advise you not to overlook these small expenses. As much as you take short trips on Uber, for example, they can add up and become a problem at the end of the month.
As much as possible, use public transportation or walk. Depending on the distance, it can be much cheaper.
19. Avoid eating out will save more money
Eating out can be very expensive depending on where you work or where your business is placed. For this reason, we recommend that you bring your food to work.
Once again, we are not suggesting that you do not eat out when you want, but just that you try to reduce restaurant expenses when possible.
If you work from home, it will be even easier for you to follow this proposal. In addition, you will be able to eat healthier by closely monitoring what you eat and how you prepare it.
20. Choose automatic payments for your accounts
Automating invoice payments is a great way to avoid late fees.
The accumulation of bills is never a good idea since it makes you lose control of your finances.
To solve this problem, we have two suggestions: spend less (which is the main idea of this post) and, if possible, set the due dates of the invoices close to their payday.
21. Save every extra money.
The 21st and last tips are pretty obvious, but it makes all the difference for you to manage your money a little better and make it grow. In a word: save every extra coin you earn.
Well, we advise you to save that extra money and invest it, adding it to the 10% that you already save each month. Since this extra money is a pleasant surprise, you won’t lose it when it’s time to pay the bills.
It is important to remember that the more you invest, the more you earn, which in turn means more money to buy something important or make improvements in your business.
However, savings and control measures are only one part of the money management game, the other is to become more efficient by generating it.
Have we left any important suggestions aside? Would you like to share with us what you do to make your money grow? Let us know in the comments.
To help you do this, you can also read our related blog posts.
* This text was originally published in January 2022 and has been updated to provide more accurate and complete information.