Effective financial management comprises of the balance between what you earn, spend, save and your investment pattern. Your earnings, spendings, savings or investments ultimately defines your financial status at every stage of your life.
Blending healthy financial habits into your lifestyle, not only sets you on the path to financial freedom, but it also frees you from the stress and anxieties that accompany trying to live freely and maintain your lifestyle. Don't think of effective financial management as another thing on your to-do list, but rather as a way of life which will guarantee you long term success in your finances.
We compiled a list of financial management tips for beginners which will help you make good financial decisions.
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Money Management Tips on Earning
1. Start a side hustle
Depending on one source of income is the easiest way to be a slave of money for the rest of your life. It will have you living from paycheck to paycheck and find yourself in the rat race. Although salaries may range, a side hustle will get you on the fast track to early financial independence and you will rely less on your next paycheck. Side hustles are all the fury, the skills on business you acquire as an entrepreneur can pay off in other parts of your career. Some of the best side hustle are; blogging, graphics design, starting a YouTube channel, freelance writing, etc.
2. Monetize your talent
Every human has a unique gift, it now depend on us to develop and monetize the gift. Even if you think it’s something everyone is doing or has already done, the truth is we all can visualize and contrive it in our own unique way. The key is being different by leaving our distinctive signature on whatever we choose to do. Monetizing your talents will earn you more while you enjoy what you do. If you do what you love, you will never have to work a day in your life.
3. Increase your earning potential
If you find yourself in a work environment where promotion comes with higher pay, you have to prize yourself to be the best candidate. In a world with highly competitive job positions, the only way to be noticed is to stand out from the crowd. Take that work course, write that professional exam, upgrade your educational qualifications, put in the extra time and effort. You can also decide to learn a new skill that will be of great benefit to the organization. By doing so, you are not only increasing your chances of earning more money but you become more valuable or indispensable.
4. Sell what you don’t need
Selling what you don't need is one of the easiest way to get extra cash on hand. Often, it is said that one man’s trash is another man’s treasure. You can get rid of things causing clutter or the excesses by selling them. No matter how little you think it might be, selling those items will make a difference in your total earnings. Sell any property you aren't using for the past six months. That car, shoes, and other properties that have not been put to use should be sold, they are not adding any value. There are many online market places you can use to find and connect with interested buyers, make use of this opportunity.
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Money Management Tips on Spending
1. Track your expenses
A small leak in a great ship will sink it. If you don't monitor how much leaves your wallet or bank account and the purpose, chances are you are unaware of little, or even large expenses that are tearing your pocket. It pays to examine your expenses and know if there are ways you can reduce your spending.
2. Align spending with values
To you, if money is a tool just to “acquire” then you probably don’t know the value of your money. Aligning spending with your values will guide you to thinking consciously when you spend. It will also give you a clear view on priorities and irrelevant expenses.
3. Embrace frugality
Been frugal or economical doesn't mean you are denying yourself pleasures, it means understanding you can survive on “enough”, and still have a rich and fulfilling life. It’s debunking the lie that having “more” will give you long term relief. The pursuit for more is a vicious cycle of dissatisfaction, by knowing your “enough” you are spared from the torture of inadequacy. Avoid spending money unnecessarily. Instead of buying that expensive car that will shake you financially, you can go for the cheap one.
4. Have a plan and stick to it
Financial independence is a unanimous goal in life. No one wants to depend on anyone or worry about money in general. Having a plan that aligns with your financial goal and sticking to it is the only way money rules and tips can work effectively for you. Prepare a budget that works for you to so as to manage your spendings.
5. Know the Difference between wants and needs
Knowing the difference between your wants and needs will go a long way in controlling your spendings. Some people spend so much money on wants and ignore the needs. Our needs are things we can't do without, some of our basic needs as human include shelter, clothing, food etc, while our wants are our desires, things we can do without. Buying another car, going to party are examples of wants.