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Successfully managing your money comes down to one thing–control. For all the things we talk about here at The Dough Roller from retirement to investing and taxes to credit cards, financial freedom and sound money management come down to whether you control your money, or whether it controls you. As I’ve often said, the good news is that sound, wealth-building money management is simple. The reality check, however, is that managing your money, while simple, is not always so easy.

Two things make managing money difficult. The first is that for most of use, we always want more. We often see contentment not in who we are or what we do, but in what we have. The result is constant pressure we put on ourselves to have more. The second thing that makes controlling our money difficult are the endless issues and options when it comes to money. How much do we save for retirement and where do we invest it? How do we track our spending each month. Should we buy or rent a house? How much life insurance should we buy? The financial decisions we are called upon to make can feel overwhelming.

While no single article can cover every money management issue, in this Easy Guide to Money Management, we’ll look at 10 simple and easy to follow tips and tricks to help us better manage our money.

Money Management Tips and Tricks

  1. Track spending by using a debt or credit card: I hate keeping track of everything I spend. I’ve tried in the past, with good intentions and a fancy spreadsheet or money management software. But I just don’t keep up with it. So now I use a debit or credit card for virtually everything I buy. Everything. If I use a credit card, I pay it off in full every month (and earn travel rewards or other rebates along the way). And at the end of the month, I have a complete record of everything I’ve spent.
  2. Keep track of your net worth: Determining and tracking your net worth is one of the most important financial management steps you can take. Your net worth is simply the value of everything you own less the amount of all your debts. It’s net worth, not income, that determines true wealth and financial freedom. And it is key to remember that a monthly budget is closely tied to net worth. What happens with your monthly budget, whether you spend more than you make or make more than you spend, is reflected in your net worth. Make more than you spend, and the extra income ends up in either increased savings or decreased debt. Spend more than you make, and your debt has to go up. I’ve tracked my net worth on a simple spreadsheet for years, but you can use money management software such as Quicken or Microsoft Money if you want.
  3. Start investing today: I started investing as soon as I graduated from college. I did not wait until my school loans or other debt was paid off. It was not a lot of money at first, but even a little adds up over time. And don’t get twisted over where to invest your money. Picking sound mutual funds in a well diversified portfolio is a snap. Here are some articles to get you started:
  4. Prepare for periodic expenses: Car insurance, life insurance, Christmas and other gifts, car repairs and the like never come at a convenient time. So be prepared. I recall how free it felt when I set aside 1/6th of my semi-annual car insurance bill each month so that when it was due, I had the money to pay it. It takes discipline to manage your money this way, but it is definitely worth the peace of mind. And if you are looking for an a place to stash your cash at good interest rates on savings accounts, check out these online savings accounts.
  5. Save for emergencies: Whether you save three months, six months, or even one month worth of living expenses, save for emergencies. Otherwise, you’re living paycheck to paycheck, and there is nothing more liberating than realizing you can survive for some period of time without earned income.
  6. Diversify your income: I don’t care how much you make from your job, having a steady stream of additional income from another source is liberating. I get my multiple streams of income by making money blogging and real estate investing. There are many ways to earn a second income. Just pick one and get rolling.
  7. Buy a home and live in it a long time: I know that with falling real estate prices, many now claim that renting is the way to go. But long term ownership of real estate can build substantial wealth; renting never will.
  8. Take advantage of free money: In my research for The Dough Roller, I’ve run across hundreds of ways to save money. And I’m particularly fond of money saving tips that do not require me to sacrifice anything. I take advantage of 0% balance transfer credit card offers; I buy store gift cards at a discount; I bought my last car on the Internet from a dealer 500 miles a way and had it delivered to my home; and I look for ways to lower my utility bills. I’m not frugal; never have been. But I also don’t pass up a good offer when I see one.
  9. Give to a good cause: Whether it is your church or some other charity, give some of your money away. What’s the point of all this money management fuss if we do not do something meaningful with at least a small portion of our income.
  10. Take advantage of the internet: The internet provides a wealth of tools to help manage your money. I’ve already linked to online budget tools above. But think of all the things you can do via the Internet in relation to money management: access your checking account, view your investments, apply for a credit card, get a mortgage, check the value of your home, check the value of your boss’s home, prepare and submit your income taxes, find money saving deals, comparison shop, and the list could go on forever.

So there is a list of 10 easy money management tips. Do you have other tips to help readers take control of their money? If so, share our ideas in the comments below.

Article comments

Total Tip says:

Thank you very much for your post. This is a nice posting. I really like this post and absolutely very usefull to me. Thank you.

Mo Money says:

This is a keeper! I liked all the tips and suggestions that you stated in this post. Very good!

BSD says:

Great tips. Thank you.

Pinyo says:

DR – This is a great guide. Definitely easy and helpful.

Glblguy says:

Excellent list of tips and strategies DR. The only thing I’ll add is to not only track your expenses and spending, but budget them as well.

Good stuff!

Patrick says:

Great series, and thanks for the link back. 🙂

David says:

Thanks for putting this all in one place, it’s a great reference. And thanks for including me!

Jenna says:

I really like that you advocate investing while paying down debt, instead of waiting to do it.

For many people debt can become a never ending cycle. If they have to wait until it’s paid off, they will never invest.

Even when I do manage to get out of debt, the best time to invest was still yesterday, and the second best time is today – not tomorrow.

Investments need time to grow and compound. Smart to do it while you pay down debt – even if you end up paying more interest on the debt, you are building something positive for yourself in the meantime.

DR says:

Jenna, your comment is right on the mark. Start investing today, even if it’s $100 a month or even less!

Louisa says:

Wow, this post was great! I work as a financial advisor at an accounting and consulting firm in Boston, Vitale Caturano (www.vitale.com) and couldn’t have said it better myself. This is such a great resource, thank you!

DR says:

Louisa, I love Boston! BU alum. Thanks for the comment.

Sefa says:

Very helpful articles! Thanks.

Griff says:

Good stuff! I think saving for emergencies, start investing now, and find somewhere to give your money away are some of the most important things to do right now. I think people forget how important GIVING is when it comes to finding true financial freedom. Thanks for the post! I look forward to more.

Dan says:

DR- Good Stuff and still timely two years after the fact.

Bentenne says:

Been really helpful; it’s the start of being in control of my financial life as a student. And I guess I’ll never toy with saving for emergencies. Thanks.

barbara says:

I will be coming into a lot of money.. My question is– should i put it into the bank and borrow against it to pay off all my debts??

Ralph says:

I would argue to pay off debts first before investing except in 401Ks and IRAs especially when you get a company match. Don’t miss out on free money.

On a house, buy the house you need or can afford ( the lesser of the two) and not the big house you want (in regards to size and cost) just because you can afford it. I think a house is a good investment because if first offsets rent payments and then builds equity. A house too big becomes a liability in increasing utilities, maintenance and time. I’m weary of the thought that an extremely big house is an investment.

This is a great time for real estate investing. I’m not sure about blogging.