5 Tips on Managing Your

 Effective financial management is necessary for staying out of the red. But not everybody knows how to handle their money properly. For example, how is an average person who has virtually no knowledge on financial management supposed to take care of his cash? If you've been wondering but haven't yet figured out how, here are 5 simple ways to manage your finances and stay above the line by yourself:


1) Start budgeting.


Planning how to spend your available money, or budgeting, is a great way to stay on top of your finances. Not only will you be able to keep track of your funds and cash flow, but you'll also be effectively preventing yourself from spending more than you should. To monitor your comings and goings as clearly as possible, make a list, create a spreadsheet, or use an online budget planner.


2) Stop making unnecessary expenses.


Once you know how and on which things you spend, start cutting back on those you don't really need. There may be a lot. For instance, do you have a grande latte at Starbucks every morning? If you do, not including the money you spend on gas or the transport fare, that's nearly $900.00 a year. Making coffee at home yourself will cost a lot less. The fewer frivolous expenditures you make, the less likely you'll get into debt.


3) Don't use or stop using credit cards if possible.


While convenient, using credit cards could be a slippery slope down to incurring debt. It makes spending money too easy. It lets you spend even if you haven't got the money yet, which could encourage you to spend more than you should. Pay with bills as often as possible instead. Apart from keeping a close eye on your available funds, you'll be able to prevent yourself from spending too much. According to a study, the more money-especially crisp bills-people handle, the less we'd like to spend.


4) If you need a credit card, apply for one with a low interest rate, but make sure to understand the agreement before signing.


If you need a credit card for, say, your job or doing business, apply for one that won't require you to pay a high interest rate. The lower the interest, the more money you could save. But there might be other expenses in the agreement, so go over it carefully before signing to make sure that you aren't biting off more than you can chew.





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