How to manage your money

1. For one month, keep track of all your expenses. You don't have to
limit yourself; just get an idea of what you spend money on during any
given month. Save all your receipts, make note of how much cash you
need versus how much you expense to credit cards, and figure out how
much money you have left over when the calendar turns.

2. After the first month, take stock of what you spent. Don't write down
what youwished you had spent; write down what you actually spent.
Categorize your purchases in a way that makes sense to you.

3. Now, write down your actual budget. Based on the month of actual
expenses and your own knowledge of your spending history budget
out how much of your income you want to allocate to each category every
month. If desired, use an online budgeting platform, such as Mint.com, to
help you manage your budget.

4. Be honest with yourself about your budget. It's your money there's
really no sense in lying to yourself about how much you're going to spend
when making a budget. The only person you hurt when doing this is
yourself. On the other hand, if you have no idea how you spend your money,
your budget may take a few months to solidify. In the meantime, don't put
down any hard numbers until you can get realistic with yourself.

5. Keep track of your budget over time. The hard part of a budget is
that your expenses may change from month to month. The great part of a
budget is that you'll have kept track of those changes, giving you an
accurate idea of where your money went during the year.

6. When you can borrow/rent, don't buy. How often have you bought a
DVD only to have let it collect dust for years, without using it? Books,
magazines, DVDs, tools, party supplies, and athletic equipment can all be
rented for smaller amounts of money. Renting often saves you the hassle
of upkeep, keeps room in your storage, and generally causes you to treat
items better.

7. If you have the money, pay a high down payment on your

mortgage. For many people, buying a home is the most costly and
significant payment they'll ever make in their lives. For this reason, it
helps to be in the know how to spend your mortgage money wisely. Your
goal in paying off your mortgage should be to minimize interest payments
and fees while balancing out the rest of your budget.
8. Understand that owning a credit card may be very important for
establishing credit. A credit score of 750 or above may unlock significantly
lower interest rates and opportunities for new loans nothing to sneeze
at. Even if you rarely use the credit card, it's important to have one. If you
don't trust yourself, just lock it in a drawer.

9. Spend what you have, not what you hope to make. You may think of
yourself as a high earner, but if your money doesn't back up that
statement, you're shooting yourself in the foot acting like you are.
The first and greatest rule of spending money is this: Unless it's an
emergency, only spend money that you have, not money that you expect to
make. This should keep you out of debt and planning well for the future.

10. Familiarize yourself with different investment options. As we grow

up, we realize that the financial world out there is so much more
complicated than we envisioned as children. There are literally options to
trade imaginary items; there are futures to bet on things that have not yet
happened; there are sophisticated bundles of stock. The more you know
about financial instruments and possibilities, the better off you'll be when
it comes to investing your money, even if that wisdom consists only of
knowing when to back away.

11. Take advantage of any retirement plans that your employers

offer. Often, employees can opt into a retirement 401(k) plan. In this plan,
a portion of your paycheck is automatically transferred to a savings plan.
This is a great way of saving, because payments come out of their
paycheck before it's cut; most people never even notice the payments.

12. If you're going to put money into the stock market, don't gamble with
it. Many people try to day trade in the stock market, betting on small gains
and losses in individual stocks every day. While this can be an effective
way of making money for the seasoned individual, it's extremely risky, and
more like gambling than investing. If you want to make a safe investment
in the stock market, invest for the long term.[8] That means leaving your
money invested for 10, 20, 30 years or more.

13. Have good insurance coverage. They say that smart people expect
the unexpected, and have a plan for what they'll do just in case. You never
know when you'll need a large sum of money during an emergency. Having
good insurance coverage can really help tide you over through a crisis.
14. Think about getting a Roth IRA for retirement. In addition to, or
perhaps instead of, your traditional 401(k) plan which is usually an
employee retirement plan talk with a financial advisor about getting a
Roth IRA. Roth IRAs are retirement plans that let you invest a certain
amount of money, and extract it, tax-free, after you turn 60.
15. Start by holing away as much of your expendable income as
possible. Make savings a priority in your life. Even if your budget is small,
tweak your finances so that you save around 10% of your total earnings.

16. Start an emergency fund. Saving is all about frittering away

expendable income. Having expendable income means not having debt.
Not having debt means being prepared for emergencies. Therefore, a rainy-
day fund can really help you out when it comes to saving money.

17. When you've started saving for retirement and put money in your
emergency fund, put away three to six months' worth of expenses.
[10]
Again, saving is all about being prepared for the uncertainty of it all. If
you're unexpectedly laid off work, or your company reduces your
commission, you don't want to take on debt in order to finance your life.
Setting aside three, six, or even nine months' worth of expenses will help
ensure that you're in the clear, even if disaster strikes.

18. Begin paying off your debt once you're established. Whether it's
credit card debt or debt left on your mortgage, having debt can seriously
cut into your ability to save. Start with debt that has the highest interest
rate. (If it's your mortgage, try paying off larger chunks of it, but focus on
non-mortgage payments first.) Then, move onto your second-highest rate
loan, and begin paying that off. Move down the line, in decreasing order,
until you've paid off your entire debt load.

19. Begin really ramping up for retirement. If you're getting to be that

age (45 or 50), and you haven't started saving for retirement, it's really
important to start ramping up right away. Make your maximum
contributions to your IRA ($5,000) and your 401(k) ($16,500) every year; if
you're older than 50, you can even make so-called catch-up contributions if
you want to pad your retirement savings.

20. Make a list of your guaranteed monthly income. Calculate all of your
income on a monthly basis. Do not include any income you hope to get
from overtime, tips, bonuses or anything else that is not guaranteed. Only
use income that you know, without a doubt, will be earned that month.
This gives you a clear picture of how much money you have to spend each
month, allowing you to draft an accurate budget.

21. Track all of your expenses each month. Keep all of your receipts to
get an accurate picture of your spending habits. Luckily, modern
technology has made this easier than ever, as you can log-in online to see
you bank and credit card activity.

22. Break your expenses down into fixed, essential, and non-
essential. This is the best way to see where you can save money and start
spending wisely.

23. Keep these records every single month. You cannot just do this once
and expect to get a perfect budget. The best way to see how you spend
money is to keep tabs on it all the time, checking at least once a month to
see how you are doing. In general, your income will stay the same, so you
will need to adjust your expenses if you feel like you are losing money.

24. Calculate how much money you have left over after fixed and
essential expenses. ake your guaranteed income and subtract the fixed
and essential expenses to find out how much money you have to spend
each month.

25. Split your remaining "allowance" into savings/investments and

lifestyle activities. There are many, many schools of thought on how much
money you should be saving each month, and they all have their pros and
cons.
26. Set a personal budget and stick to it. Once you know how much
spare cash you have, you need to commit to spending no more than what
you have. If your problem is shopping for clothes -you have a passion for
fashion- you need to learn to ask yourself.

27. Only use credit cards for bills you know you can pay that
month. Credit cards are not free money. Interest rates on credit cards are
huge, even if they don't make you pay them immediately. Managing your
money wisely means using your credit cards wisely-- as extensions of your
budget, not separate budgets.

28. Know your purpose when shopping. Impulse buys are the bane of
smart shoppers and money managers.

29. Do your research before making any big-ticket purchases. Car

shopping, for example, is not the time to turn into an impulse buyer. It is
also not the time to get swept up in a sales pitch, no matter what the car
dealer is trying to tell you. You can save tons of money by taking 2-3 hours
to research cars, house, home theater systems, etc. in advance before you
go shopping, avoiding rip-offs and getting what you came for and nothing
more.

30. Buy in bulk whenever possible. It is difficult to lower your essential

expenses, such as food, but it is not impossible. Buying in bulk is more
expensive up-front but you save money in the long run. You can buy
toiletries, food, and cleaning supplies online or at bulk stores like Costco
to slash your expenses.

31. Take out the money you can spend in advance if you have trouble
saving. If finances are tight, one of the best ways to keep from
overspending is to take out the total amount you have to spend, in cash, at
the beginning of the month. Separate it out into envelopes, one for food,
gas, rent, etc. so that you know exactly how much you have. Leave your
debit / credit cards at home. It is a lot easier to simply swipe a debit or
credit card without thinking about the dollar value of a purchase. If you
have to hand over the same amount in cash each time you buy a non-
essential item you are much more likely to pause.

32. Aim to have 3-6 months living expenses, at a minimum, saved at all
times.Many financial advisers even suggest going further, saving for at
least 9-12 months, but 3 is the absolute bare minimum that you should
have on hand in case of emergencies. This money is only spent if you
absolutely need it, like if you lose your job or need to pay medical bills.

33. Make a list of your saving goals. Depending on what you want to
save for, the amount you need to save each month will change drastically.
Make a list of events you want to save for, their costs, and then the
number of months until the event occurs. For example, you may need to
buy a car for a new job next year. You've got your mind on a used car for
$5,000, and the job starts in 6 months. This means that you need to save
roughly $834 each month to pay for the car.

34. Invest in your future early and often. Placing $5,000 a year in
retirement savings in your 20's earns you twice as much money when you
retire as someone who invests $20,000 a year in their 40's.[9] This is
because, with time, a small amount of money gains interest. That interest
then gains interest as well, quickly multiplying your money. Long story
short-- saving now will pay big dividends later on in life.
35. Save and pay debts simultaneously whenever possible. Do not try
and prioritize one at the expense of the other, as you could actually be
losing money. For example, you can write-off $2,500 of your student loans
on your taxes, and the interest rates will always stay fixed. This means
paying the minimum now and pocketing any excess cash in savings will
actually make you money, as the write-off can offset interest payments
and the savings have more time to grow with interest.

36. Put away profits and raises in savings accounts or

investments. Whenever possible, take additional cash and throw it into
savings and investments. You may be tempted to buy a nice new car or toy,
but saving the money now will make a huge difference later in life.

37. Look into employee-matching options. Many companies that offer

401k investments offer matching benefits as well, meaning they will
double what you pay for your own future. The benefits of this cannot be
overstated -- it is literally free money for your retirement. Talk to your HR
department to see what options you have -- some companies also have
matching college saving programs and stock or investment options as
well.

38. Create a budget. Track your spending and income so you have an
accurate picture of your financial situation. Save receipts or write down
your purchases in a notebook as you make them. Review your bills each
month and add those expenses to your budget.

39. Plan your purchases in advance. Making spur of the moment

decisions can balloon your expenditures. Write down what you need to buy
while you're calm and at home.

40. Avoid impulse purchases. If planning your purchases in advance is a

good idea, buying something on the spur of the moment is a terrible one.

41. Shop alone. Children, friends who love shopping, or even just a
friend whose tastes you respect can influence you to spend extra money.

42. Pay in full and in cash. Credit and debit cards increase spending for
two reasons: you have much more money available to spend than you
normally would, and because no visible money is changing hands, it
doesn't register as a "real" purchase. Similarly, running up a bar tab or
using a delayed payment scheme makes it harder to realize how much
you're actually spending.
43. Don't be fooled by marketing. Outside influences are a huge factor
affecting what we spend our money on. Be vigilant and try to be aware of
all the reasons you're drawn to a product.

44. Wait for sales and discounts. If you know you'll need a particular
item but don't need it today, wait until it ends up in the bargain bin or try
to find a coupon for it.

45. Do your research. Before making expensive purchases, go online or

read consumer reports to find out how to get the most bang for the least
buck. Find the product within your budget that will last longest and meet
your needs best.
46. Take all the costs into account. You'll end up paying a lot more than
the sticker price for many big-ticket items. Read all the fine print and add
up the total amount before making your decision.

47. Only purchase what you actually need. Go through your closet and
see what you already have. Sell or give away anything you dont wear or
that doesnt fit so you have a better idea of your situation.

48. Know when to spend more for quality. It's foolish to buy the priciest
brand of socks, since those wear out quickly. However, spending more
money on a pair of higher quality, longer lasting shoes may save you
money in the long run.

49. If you can't find it in a thrift store, buy cheap, generic brands. A
designer logo does not indicate a higher quality.

50. Compile a weekly menu and shopping list. Once you have an amount
budgeted for food, write down in advance the exact meals you will eat and
what you need to purchase at the grocery store to make them.

51. Learn tips for saving money on food. There are many ways to save
money while grocery shopping, from buying food in bulk to knowing the
times of day when various products are cheaper.

52. Minimize eating at restaurants. Eating out is much more expensive

than preparing your own food, and should never be done as an impulse by
someone who is trying to save money.

53. Save Money. Making wise spending decisions goes hand in hand
with saving. Budget as much as you can each month toward a savings
account or other reliable, interest-accumulating investment. The more
money you save each month, the better your overall financial health will
be.

54. Break free of expensive habits. Compulsive habits such as smoking,

drinking, or gambling can easily consume any money you save. Eliminating
them from your life is both a boon to your wallet and your health.

55. Don't buy what you don't need. If you're unsure about a particular
purchase, ask yourself these questions.