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5 Tips on How to Manage Your Finances More Efficiently

5 Tips on How to Manage Your Finances More Efficiently

In my school, I had to know how DNA is replicated and why the War of the Roses was called that – but finances, nope! Mathematics and arithmetics are fun (not really), but they did not provide me with what I really need today – and that is how to have enough money to survive from one paycheck to the next.

In this article, I presume that you have a job, or at least some sort of income, and I have a good guess that you are not good at managing your finances; well, guess what? Nobody is. Unless you are Donald Trump and you are born rich.

The rest of us, we have to make do with what we’ve got, and it usually isn’t enough. Mortgages, credits, student debt and other nasty words such as these can creep up on you when you least expect it and ruin your chances of visiting Italy this year, or the next for that matter.

Well, unless you’ve developed a great singing talent while reading my introductory paragraph, and you’re planning on making big bucks while singing country songs, prepare to read our 5 tips for making yourself more financially stable.

1. Know Your Expenses

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    This is the first, and probably the most important item here. You need to know exactly how much you and your family are bringing in, and how much is going out. This might seem like a true hassle and a lot of paperwork, but you need to know the current state of affairs.

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    It might seem obvious, but you should spend less than you earn, as that would be the perfect case scenario; then, you’re done and you can stop reading right now. If you find yourself on the negative side, no matter how impossible that might sound, a lot of people actually live like that, yes, it is somewhat stressful, but it is possible.

    Once you get to know where your money is going, and what kind of life it is living, it is also important to know terms like investing, taxes, insurance and retirement plans. Once again, nobody mentioned those things while you were in college, and somehow, they are trying to actively ruin your life. Remember: Google is your friend – if you don’t know something, google it immediately; only knowledge can help you with your financial troubles. Or rich uncles – they are also a nice solution.

    When creating a list of expenses, try to find something that looks like something you can live without. Maybe you don’t really need that gym membership, since the last time you visited, Christina Aguilera was still popular. On the other hand, maybe you can give a few dollars more on a bank account that will make all ATM withdrawals free – you never know where some hidden expenses might be unless you play this game of hide and seek.

    The most important thing here – be honest with yourself; the only person you could be lying to here is yourself (and people are quite good at that; I know I am – I’m looking at you, diet). The more honest and reasonable you are, the more rational decisions you will be able to make. Ask a friend to help you, your mother or father, unless they plan on nagging about how fiscally irresponsible you are.

    2. Learn What to Rent, and What to Buy

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      Many people do not agree about whether it is better to buy stuff or simply rent it – in the long run, that is. For example, if you are planning on renting a home, where you plan on living with your family, it is better to think about buying it permanently, via bank credit. Renting may sound like a good solution for now, but after 10 years (and trust me, time passes by quickly) you might regret only renting, when you could have paid off 70% of your home by that time.

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      On the other hand, renting a DVD might be a much better solution than buying it. I know, nobody buys DVDs anymore, but you get my point. Do not go in blindly and buy everything you need; there is probably a service that can provide you with the same result, for less money. If you’re having money issues, it’s a better idea to join the local library than buy every book you want.

      If you plan on using something for a long time, then it is better to buy – it is called cost analysis, and it sounds difficult, because it is. It involves not only money, but whether you actually need that item, and how much money that item will cost you in the future. Even though I mentioned that you should take a bank loan and buy a home, it is not a piece of advice I give out lightly.

      You should be 110% sure that you can survive such an adventure, and then decide. Think about your future mortgage and when you should start paying it off. Maintain a high credit score, which means that you cannot use your credit card like Monopoly money; only buy what you can actually afford.

      3. Play the Responsible Game – Invest

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        Now, this is something everyone needs professional help with. Finances are all around us, and they are way more complicated than we’ve ever imagined. Investing may sound like magic from a Harry Potter book and, while it might actually be quite similar, it has real-life consequences, and you should be on the winning side. The more you know about the financial instruments at your disposal, the better choices you’ll be able to make, and you’ll know when to back away.

        Investing into your 401(k) plan is also an investment, even though many people don’t consider it that way. Whenever you get your paycheck, a small portion is set aside, and after years, especially when you’re older and unable to work, you’ll have money on the side, or in case of an emergency.

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        If, on the other hand, you’re interested in stocks, there are many options that we cannot cover in an entire article itself. That is why it is better to find someone who does that sort of thing professionally, but even then be mindful of what you’re doing.

        Another type of investing can be insurance. There are many kinds of insurances. You can insure almost anything (it’s even said that Jennifer Lopez insured her behind, so there’s that fun fact). You never know when you might need a large sum of money for something unexpected. Hey, nobody likes thinking about this kind of stuff, but it is a part of life.

        Life insurance might help your family if someone unexpectedly dies, and health insurance will help you with doctors’ bills. Home insurance will help you in case of break-ins, natural disasters and what-not. Like I said, it is all dark stuff, but dark stuff happens.

        4. Always Have a Savings Account

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          Once you’ve surveyed your finances, and found some money you are willing to set aside, then it is a good idea to start a savings account.

          Choose any bank, just don’t try to hide your money under your bed. Not only will a bank give you a small interest (in this case, you are lending your money to a bank, and they are paying interest to you – and isn’t that a nice turn of event?), but it will keep your money safe and sound, and always at your disposal. Even a small monthly amount can accrue to a lot of money over a few years, and that can easily become your kid’s college or emergency fund.

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          When creating a savings account, you should always have at least 3 months’ worth of money – so that in case you suddenly lose your job, you have some time to find another without worrying about survival. Another great piece of advice here is to create a special savings account that is not connected to any credit card. This is to prevent yourself from spending that money when you do not really need it. You should not even have easy access to it. It might sound counterintuitive, but it will help you save some money.

          5. Find Additional Income

          Another great piece of advice that might seem too obvious is that you should find another job. There are many agencies that will give you an opportunity to work online as a tutor of almost anything you are good at. Do you know a bit of German or French? Why not use those skills and earn some money in the process. The Eastern markets are full of people who are more than eager to learn Western languages, so it is even possible to be an English teacher, even though you are not fully qualified.

          If you need more radical changes, you can sell off the stuff you don’t use, and make some money that way. Make a yard sale, or even better – put all the things you haven’t used in the last year on eBay, especially things like clothes and electronic appliances.

          Mind you, this won’t solve your finances, but it might help in the short run, especially if you are struggling to get your hands on some quick cash. An additional job will help you in the longer run, but it will probably ruin your personal life, but who needs that anyway.

          All joking aside, finances are no laughing matter. Money can ruin your life or make it great, so it is extremely important to always take care of it. Spend it wisely, invest it properly, and always have a small backup.

          If you are in dire need of some help, either find an additional job or ask a friend for a quick loan. Refrain from banks, but if you cannot avoid them, use their services cautiously, and always bring someone with more experience to the bank; they can help you understand the fine print and make a better decision. Good luck!

          Featured photo credit: http://getrefe.tumblr.com/ via 66.media.tumblr.com

          More by this author

          Vladimir Zivanovic

          CMO at MyCity-Web

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          Last Updated on June 26, 2020

          25 Easy Tips on How to Save Money Fast

          25 Easy Tips on How to Save Money Fast

          “How to save money fast?” This is the question asked by all of us not in the top 1% of rich people.

          If you are looking for ways to drastically reduce your expenses immediately, first look at what you need to spend money on every week. And I mean really need.

          You don’t really need to order in food. You don’t really need to buy expensive perfume.

          Building from that, you can work out how your regular expenses can be reduced.

          As for irregular expenses, they can also be deceptively costly in the long run. Once-off buys can also be tackled with some prudent planning and a little extra research.

          And remember: a budgeted lifestyle does not mean a bad or boring one!

          But first, understand what budget you can cut down on daily:

          • Regular expenses for the average adult (can be trimmed but not eliminated):
            • food
            • rent/mortgage
            • cell phone
            • insurance
            • socializing/entertainment
            • transportation
            • hygiene products
            • household bills
          • Irregular expenses for the average adult (can be eliminated or cut down a lot):
            • travel
            • clothing
            • medication (*depends)
            • grooming (hair, nails etc.)
            • gifts

          Now, let’s dive right into the 25 ways to save money fast:

          Save Money on Food

          1. Bring a stock of food to the office/work

          Instead of popping out for an overpriced salad and a smoothie, leave a set of basic utensils at the office as well as a stock of non-perishable goods such as tinned fruit, tuna, rice crackers and so on (try to avoid the junk food and this can turn into a pretty great diet!).

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          Stocking up means you won’t forget or say “I didn’t have the time” when you rushed out to work in the morning.

          2. Buy the store-brand version

          Many basic foods, such as bread and milk, will taste exactly the same as their branded alternatives. Go for stuff with minimal additives and preservatives. Meat in a tube is probably insanely unhealthy!

          3. Eat cheaper cuts of meat

          Learn how to tenderize and flavour cheaper meat and fish, and save on the (typically) most expensive item on your grocery bill.

          4. Have group dinners

          If 10 friends put $5 each in the kitty, it’s pretty easy to make a giant lasagne and get refreshments, as well as hang out with your favourite people.

          Save Money in Transport

          5. Get a bicycle

          Save on gas money and bus/metro fares with this underrated mode of transport.

          6. Use public transport and/or don’t get taxis

          Some places can only be reached by car. But as a good practise, check your public transport website and see if any routes pass nearby where you need to get to. Walk as much as you can.

          7. Find the cheapest gas

          Regularly check out where the cheapest gas can be bought.

          Save Money in General Shopping

          8. Shop online

          Not only will you save on the gas or transport fares from going to the shopping mall but you will also find better deals

          9. Sell your old stuff

          Get your unwanted belongings up on eBay ASAP and earn a few dollars.

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          Here’re more ideas for you: 25 Things to Sell to Make a Lot of Money

          10. Bulk buying stores

          For regular non-perishable/slow perishable purchases such as toilet paper, cat food, pasta, washing powder and so on, do an epic stocking-up trip to a co-op or equivalent (my mum used to go to a place that restaurants buy from).

          Be wary of supermarket “deals”, as some have been found to be fraudulent after working out a simple calculation.

          11. Become a flea market/car boot sale/street market guru

          You can find original gifts and develop good negotiation skills at these places.

          12. Generic brand medication

          More often than not, the generic version of paracetamol and other basics work the same as the branded version.

          13. Choose deodorant, not perfume

          It blows my mind when someone drops $70 on a bottle of spray. Stick with a nice deodorant, and not only will you smell just fine but you’ll be sweat-free as well!

          Cut Down on Household Expenses

          14. Printing

          Ink is one of the most expensive substances in the office and coloured ink is doubly so. B

          e more efficient and choose black and white, and if your printer doesn’t have a print-both-sides options, just print odd pages first, re-insert the paper and print even pages.

          Expand the margins of what you are printing as often as you can to save on paper.

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          15. Minimize SMS and phone calls

          A combination of a free chat service such as WhatsApp and a free call service such as Skype can reduce your bill to nothing (so long as you have a decent Wifi connection).

          16. Shop around for insurance

          Most people don’t spend enough time searching for the best insurance deal.

          Keep a watchful eye out for deals and new competitors in the market.

          17. Try re-negotiating your rent/mortgage

          If you have built up a good credit history or a good rapport with your landlord, then chances are a frank chat about needing to tighten your spending could result in lowering your payments. You’ve nothing to lose from trying.

          18. Don’t get a TV

          Invest in a computer/laptop and an internet-only package. You can watch more (and often better) entertainment on the web, and skip the advertisements as well.

          19. Pool your internet bill with a neighbour

          My apartment building is basically a big old house split into three apartments. There are five of us in total. We pool the internet bill, making it crazy cheap.

          Save Money in Socializing, Entertainment And Travel

          20. Have house parties

          Instead of paying for overpriced drinks, set up a series of in-house get-togethers with your friends. Everyone takes a turn, so it’s not always your house that needs cleaning.

          For sound insulation, hang heavy drapes on the walls and windows. For music, invest in a good second-hand set of speakers which you can connect to your computer. Let Spotify or Grooveshark playlists do the rest.

          21. Open festivals, meetups and events

          It never fails to surprise me how much underground stuff goes on around me for free or for very cheap. Find out who runs the blogs and websites that list all the less well-known cultural activities.

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          22. Volunteer

          If you can’t pay for a ticket, volunteer and get to be there anyway.

          23. Housesit

          There are multiple housesitting websites offering you the possibility to avoid paying hotels and skip the discomfort of crummy hostels.

          Save Money on Hygiene and Beauty

          24. DIY beauty

          French manicures, pedicures, waxing, eyebrows… pretty much all of these can be achieved at home (and done well) with some practise. There are plenty excellent blogs and YouTube tutorials to help.

          25. Fewer haircuts/volunteer at a trainee hairdresser

          If you can’t bear the risk of a trainee touching your locks, learn more ways to manipulate your hair as it grows and get haircuts sparingly. Women’s haircuts are outrageously priced in many cities.

          Bonus: Effective Money-Saving Tips for Everything

          Here’s a summary of what you can generally do to save more money:

          • Share/pool resources. Organize a neighbourhood sharing scheme, common resources for your apartment block or with your friends. Not everybody needs an individual lawnmower.
          • Buy energy-saving everything. The easiest way to lower your bills – replace those lightbulbs!
          • Buy in bulk. Be sensible about it (i.e. make sure you have space!), and drastically reduce weekly expenditure.
          • DIY. Skill up using YouTube tutorials on plumbing and many other essential services so you never have to pay for simple problems again.
          • Research a lot before making a decision. Most money-wasting is the result of poor preparation and planning. Don’t shirk this part just because you don’t like it!
          • Use your network. Your network is full of resources that can ease the pain of budgeting. Ask for help.
          • Stop and think. Do I really need it?

          Unfortunately, there are some things that require plain ol’ giving up for the time being. This can include high-cost sports such as skiing, the latest versions of some technologies, the finest brands of food/drinks, premier seats at the opera and most other indulgences.

          What is important to remember during lean times is that when you look back on your life, it will be the experiences that stand out, not the extra comforts.

          Living on a budget can teach you a lot about how much you can really get out of your paycheck. We only live one life, so make the most of every penny you earn!

          More Tips for Personal Finance Management

          Featured photo credit: Unsplash via unsplash.com

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