5 Steps That Lead to Better Money Management

Money, in many ways, is about mindset.

Certainly, examples abound of people born into circumstances on either end of the money spectrum – both very rich and very poor – where it would take a great deal of effort to change those circumstances.

But the truth is most of us fall somewhere in the middle, and focusing on money management can make a big difference.

This is especially true when thinking about making a big purchase, such as a car. You likely have the resources to get a good, dependable car, but you might feel as if you don’t because of not having a handle on money management.

If that’s the case, you are not alone. Consider some or all of the following basic tips that can lead to better money management.

Money Management Tips:

Focus on Details

Some people will complain about having little money while holding an $8 coffee in one hand and s $5 bagel in another – purchased with cash they got from an ATM that charged them a $2.50 fee. Yes, focusing on saving a few dollars here and there won’t completely change your financial situation, but over time it can help. Just shaving off $5 a day in unnecessary expenses can lead to $150 saved a month – how far would that go toward paying the monthly note on the car you want?

Set Money Goals

Actually write down where you want your money to go. That way, there’s less temptation to spend it on things you don’t really need (another night eating out, for example). Instead, you will let the money add up so you can pay for that item you have always dreamed of having.

Compare Prices

Don’t rush in. When looking at a major purchase such as a car, be sure to compare prices online before falling in love with one model. You can choose a site dedicated to one make of car or a site such as Apply & Buy that gives you a chance to peruse various makes and models. Just be sure to never leap into a major purchase, always making sure that you are getting the best value for your hard-earned dollar.

Focus on Savings

Figure out whatever amount you can set aside into savings and then routinely set that money aside. If you want to save more, just save what you can and change you circumstances until you can afford more. Whatever you save will prove to be a benefit. It also gives you a cushion to help pay for emergencies when they come along.

Use Cash, Track Spending

Taking out a loan to finance a big purchase such as a car or home is a great way to build up a good credit rating. However, using credit cards to make routine purchases can quickly add up. Unless you plan to pay off the card each month to avoid fees and interest charges, it’s a wise move to use cash. Also, track every penny that you spend – you might be surprised at where it goes.

All of this leads to the ultimate goal – changing your behavior. If you put these ideas into practice, you won’t wake up wondering how you spent $120 on pizza last month but still are worried you can’t buy that used car you’ve had your eyes on for months.

Following these ideas, and setting priorities, can lead to better money management and achieving your financial goals, whatever they may be.