Top 5 Tips For Managing Money

Yesterday was the greenest holiday of the year, so I thought I would share some tips for saving green. You know, the kind you want waiting at the end of the rainbow.

1. Set a budget and stick to it

You're all heard this one before, but it's time to actually do it. Take a hard look at what you earn each month and what you're spending. Pull up the last few months of bank statements/credit card transactions and total what you spend in the categories that are most important to you, like utilities or food. A $4 latte at Starbucks may not seem like much, but when you visit the java siren a few times a week, it adds up quickly. Be realistic about what you should be spending in each category per month and devise a plan to cut back on expenses. If you eat out for every meal of the day, suddenly slashing the food budget to $50 a week for groceries and going cold turkey on restaurant isn't going to happen. Ease yourself into spending limits, so that you're less likely to feel strained and more likely to stick with it. 

2. Learn the difference between 'want' and 'need'

This has been the hardest one for me. I was a bit of a shopaholic and when I was working in retail was heaven for my closet. My wallet? Not so much. Each collection came in with a few new items I 'needed' to have. The reality is I have more clothes than I could ever wear in a year and even though I felt like I needed a new white blouse or the latest style of jeans, it was really a want (everything with clothing falls into this category for me). Wants don't go into the budget and are reserved for Christmas and birthday lists.

3. Just because something is on sale doesn't mean you should buy it

I know more than a few ladies who need to heed this advice. Getting a great deal, say an $80 sweater for $5 at the end of season sale, feels exhilarating and provides a great story to tell. BUT would you have been interested in the sweater at $80? Would you have given it a second look if it weren't $5? You're not saving money if you're buying something you would not have purchased otherwise. The same goes for items at the grocery store (or ahem Target). 

4. Make saving money easy - set up auto-savings

Save for the future without even thinking about it by setting up auto-savings. Most banks offer options to either automatically transfer a set dollar amount each period (could be weekly, monthly, etc.) or transfer a percentage of all debit card transactions into savings. That means that while you're spending, you're saving too. This is also a great way to save for retirement. Talk to your employer about how you can automatically reserve a percentage of each paycheck for retirement savings.

5. Only reserve $1,000 in savings and get rid of the rest

Just kidding. Kind of. Saving money can be hard to do and when you're at the end of the month and see a little extra cash in the bank, the inclination is to either one, spend it or two, put it into savings (good one!). That's all fine and dandy, but savings accounts earn next to no interest and you're money just sits there. Make it work for you by transferring excess savings to a higher yield account like a mutual funds, ETFs, CDs, or even invest in stocks. My personal favorites are funds with a high stock to bond ratio. Make sure to keep some money in savings in case of emergency ($1000 is the figure most often recommended).

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