Smart Money Management Tips Rich Millionaires Still Swear By

These smart money management tips will keep you on your feet and money in your bank account.

You have worked so hard to earn your salary this month, but what’s next?

Before you go crazy shopping at your favorite boutique buying that awesome pink heels you probably won’t wear throughout this month

In today’s post, we will be looking at the best 7 smart money management tips.

Disclaimer – Please note that I am not an expert in personal finance,

I am simply sharing tips that help me that I think would help you too, no matter the type or source of your income.

So if you are ready, let’s get right to it!

Smart Money Management Tips 1 : Pay Yourself First

Most people think that the idea of “pay yourself first” applies to only money that you have earned by working (salary income).

Pay yourself first can apply to income gotten from any source whatsoever,

The money was given to you is considered an income,

how the money is given to you determines the type of income,

So if money is given to you by a friend as a gift on your birthday, the income type is “gift”,

If it is given to you at the end of the month for working at a job,

it is called “salary” and if it is for a service you did for someone it is “wages”.

My point is, they are all considered as income regardless of the type, and therefore should be treated as such.

A certain percentage of your income monthly should be removed as PYF (Pay Yourself First)

It is recommended to remove this amount before you start spending money on any other thing.

What this does is that it you make your plans and budget based on what is left from your income after deducting the PYF,

That way you already have savings no matter what.

Tips 2 : Needs Vs Wants

After getting any income,

We automatically think of all the nice things that we could buy for ourselves to make ourselves feel better

But later on we realize that we didn’t really need any of these things.

Then we usually later end up spending the money that we “saved” on what we really need.

That’s why it is important to write down a list of the things we can’t do without for the next one month

Then list of things that we want but we can survive without for the next one month and add the items on the “needed” list to our monthly budget.

Doing this makes sure that you never run short of things that you really need,

Then any other spare income that you have can be used to purchase a thing or two from your “wants” list.

Smart Money Management Tips 3: Budgeting

The reason most people end up spending their savings on things that they don’t really need is because they have access to money that they haven’t made any plans for.

You need to have a list of things defined that require your immediate attention, these are your “needs”.

Planning how to use the income available to you to fulfill all or some of your urgent needs is what is known as budgeting, without a budget you spend blindly.

Without a budget you convince yourself that you need things that you really don’t need, this leads to impulsive spending.

Budgeting simply means separating your wants from your needs so that you spend your income on your needs first,

Before using the remaining amount for your wants.

Tip 4: Use A Spending Tracker

Nowadays, there are so many applications that make it easier for us to set a budget stick to it,

So many of them remind us when we are exceeding this budget.

Apps like “Spending Tracker” by MH Riley and “Wallet – Finance tracker and budget planner” are two really good applications that I have personally used to plan and budget my income and I would really recommend these apps.

If you are looking to track your spending,

These apps can be downloaded from the google play store, after budgeting your money in these applications.

It is important to take it with you while you are going grocery shopping for the month,

This is so that you can be able to follow the list step by step and see the prices allocated to each item to know when you are overspending.

Remove every item purchased off the list so that you know how much of your income is still available.

Smart Money Management Tip 5: Rainy Day Emergency Fund

After removing the percentage of PYF you want for the month,

It is advisable to remove another amount say, 10% from the remaining income for a rainy day.

This is so that, in case you have any emergency during within the next one month,

You won’t have to go into your savings to be able to solve the problem.

Constantly removing part of your income aside every month from your income for emergencies,

Helps you build a good amount that you can use whenever you have an emergency without going into your savings.

It doesn’t really matter if you hardly have emergencies,

It’s advisable to always keep a little amount aside because you never know what might happen.

Having an emergency fund puts your mind at rest with regards to any new uncomfortable event that takes place in your life.

Smart Money Management Tip 6: Passive Income

Even though we focus mainly on how to save most of the time,

I would suggest investing a certain percentage of your monthly income into a method or business that yields passive income for you.

Passive income is the kind of income you can earn without working constantly,

Meaning that you can earn this type of income while you sleep!

Investing in things like real estate, stocks, or trading are really great ways to earn good passive income.

Before investing all of your income in any of these methods,

Make sure to do your research so that you know when and how to invest your money into any of these businesses.

It is important to create passive income because relying on only one source of income is dangerous, with passive income,

If anything happens to your main source of income, You have something that you can fall back on to see you through before you get back on your feet.

Smart Money Management Tip 7: Two Savings Account

People ask me, two savings account? Why? The answer is simple,

Having two savings accounts ensures that you don’t knowingly or unknowingly tap into your savings.

When you have a specific bank account dedicated to your savings,

It’s important to cut off all access to that account so that you can’t spend it even if you wanted to.

In this case, your original savings account won’t even have a credit or debit card,

This would require you to visit the bank whenever you decide that you need to take money from it.

That way you have more than enough time to discourage yourself from going to the bank to get the money, or hopefully, you won’t have time.

Thinking of the long process it would take for you to get that money will most likely discourage you from getting the money in the first place,

talk less of spending it.

Your second savings account can act a purse where you keep money that you can or will spend at any time.

Conclusion

While making money is important, what you do with your income is equally as important,

Spending money unnecessarily or impulsively on things you don’t really need can have a bad effect on your finances despite the fact that you might be earning a high amount of money.

Managing your income helps you get to where you need to be financially, you can set financial goals and take your time in achieving them one at a time.

Using these smart money management tips above you will get control of the situation of your finances with time.

I hope that I have been able to add value to your life with this post

I love to hear from you,

Leave me a comment in the comment section below letting me know what your thoughts are on this post and which of these smart money management tips work for you.

Click here to read the “13 steps to take charge of your life”