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New Tools for the New Year: Money

New Tools for the New Year: Money

    Money can be a tricky issue for many people, especially in the last few years when we have had record high unemployment rates and difficulty making ends meet. As you get ready for the new year, you can prepare yourself with some new tools that can make 2012 one of the best years for managing your money.

    YNAB

    I started to get serious about my money situation about halfway through 2011 when I stumbled on one of the single best money management / budgeting apps around: You Need a Budget. We have actually had the founder and creator of YNAB featured here at Lifehack in the past.

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    YNAB is a piece of software (that works on Mac or Windows) where you setup your accounts and start to budget the money that you have during the month. It’s sort of like making buckets for things that you have to pay during the month and then sticking to them.

    The whole idea though with YNAB, rather than just following a simple budget, is to build up your “YNAB Buffer” where you will use it to eventually pay next month’s bills with this month’s money. This “Buffer” allows you to not get into the “not-enough-money-at-the-end-of-the-month” phenomena and helps relieve a bunch of tension in your life, especially if you have been struggling with keeping track of your money. It took me about 4 months to get my “YNAB Buffer” setup, and I will tell you, the stress and pain of worrying about where my money for this month’s bills is going to be is gone because they were payed with last month’s money.

    YNAB also has apps for iOS and Android to track what you have spent on the go.

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    Credit Cards with rewards

    I wouldn’t say that I am a credit card connoisseur by any means, as I do believe that credit cards can get you into some serious trouble if you are not responsible with them, but they can be appealing if you pay them off every month and use them appropriately. The three cards that I can recommend from personal experience are:

    The APR on these cards are pretty darn high, but as long as you pay off your balance before you get hit with the rates at the end of your month cycle, you can get some great cash back rewards when purchasing a good amount of gas or even ordering things on Amazon during certain times. Keep a look out for other cards that offer some sort of reward that is applicable to you to help you save a little bit of money here and there on things you already purchase.

    Envelope System

    If YNAB is a little too technical for you, there is also a tried-and-true-system that is a lot like it. I have seen this technique in many different places, and I’m not exactly sure who to credit it too, but the-get-out-of-debt guru Dave Ramsey has surely made it popular on his radio broadcast: The Envelope System.

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    At it’s core, The Envelope System requires you to take your paycheck, figure out how much money need to goes to what category (to food, clothing, rent, cable, etc.), create a separate envelope for each category, put the cash in the envelope, and only spend that cash. Sounds simple, hmm? Think again.

    The Envelope System is truly powerful, but only if you can stick to it which is tough to do because budgeting is tough to do. I much prefer the YNAB system to this one, but if you can only live paycheck to paycheck until you get out of debt or make more money, then The Envelope System is probably your best bet.

    Common sense

    Ahh, yes. A little common sense can go a long way when it comes to money. Here are some things to follow. Some of them were new to me this year while some are things that I need to be aware this coming year:

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    • Don’t spend more than you make
    • Create a budget and stick to it
    • Try to find a way to make more money rather than cut out every last expense that you have
    • Try giving money away to charity or a cause every month
    • Start saving money for the future today
    • Read a good money book like I Will Teach You to Be Rich
    • Don’t use a credit cards unless you can pay off the entire balance by the end of the month

    Conclusion

    Like I said above, managing your money comes down to making smart decisions (saving for the future) and avoiding bad ones (like not paying off your credit cards). If this year you budget your money correctly, save, and make smart decisions with how you spend, hopefully your money will be controlled by you rather than you controlled by it.

    (Photo credit: 3D illustration of dollar from Shutterstock

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    CM Smith

    A technologist and writer who shares advice on personal productivity, creativity and how to use technology to get things done.

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    Last Updated on January 21, 2020

    How to Develop a Millionaire Mindset in 6 Simple Steps

    How to Develop a Millionaire Mindset in 6 Simple Steps

    We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

    It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

    How do you go about developing that millionaire mindset? By following these simple steps:

    1. Focus On What You Want – And Take It!

    So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

    Millionaires play to win, not to avoid defeat.

    This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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    2. Become Goal-Orientated

    It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

    Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

    Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

    Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

    You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

    If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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    If you are to become a millionaire, you need to start accumulating money.

    Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

    3. Don’t Spend Your Money – Invest It

    The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

    Stop working for your money and make your money work for you.

    Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

    There’s not just the stock market — there’s also property, and your own education.

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    4. Never Stop Learning

    The best thing you can invest in is yourself.

    Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

    Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

    Learn everything you can about how economics works, how the stocks markets work, how they trend.

    Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

    Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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    5. Think Big

    While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

    There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

    Aim for the stars, if you fail you’ll still be over the moon.

    6. Enjoy the Attention

    To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

    Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

    If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

    Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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    Featured photo credit: Austin Distel via unsplash.com

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