Effective money management: 3 easy tips
1. First Fruits
In my life, I follow a simple principle of first fruits to set aside. To do this each month, I give the first ten percent of my income to charity and the second ten percent to savings. This principle has changed my life in amazing ways.
It is a biblical principle, called tithing, and for most of my life I neither understood nor practiced it. When my husband and I married, however, we decided to follow this principle in our money management journey. In the twenty years, we have followed this first fruits principle, I can attest to the fact we have never wanted for anything.
Begin to set aside money every month, ten percent to give away and ten percent to save for retirement. Live off the balance and watch how your perspective on money changes for the better. I promise you it works.
Next, develop a solid money plan or budget. A familiar adage states, “If you fail to plan, you plan to fail.” This tip applies to everything in life, be it diet, exercise or money management alike. Previously, I mentioned five areas of life that you should take into account in daily self-management: God, health, family, work, and play. Money management covers each of these areas and each area should be considered when creating a monthly spending plan.
I always find it helpful to do the budget breakdown in words first, taking the time to examine what you want from your money. What do you want in life? Write this down first, then allocate the money amount at a later stage. This way you will be able to allocate dollars to where they truly need to go, not leaving out anything that is a priority for you.
3. Analysis and Accountability
The final step to excellent money management is accountability. It is important to analyze the success of your plan or budget on a regular basis. Are you spending correctly or are there areas that you need to work on or change?
The analysis is important, but accountability is essential to successful wealth management. Whether with a spouse, a friend or an accountant, there is an urgent need to be accountable to someone for your money plan. The way you spend and the way you plan needs to be carefully managed, not just tracked, to have clear accountability for the variances and failures. Accountability ensures honesty, which keeps us grounded about financial matters.
A Tool for Success
Money can be a tool for greatness. If managed effectively, money makes it possible to thrive and succeed in any endeavor we set our minds towards. Optimal money management saves marriages and careers, drawing our attention back to what matters in this life. Do it well.
Pursue self-awareness and ignite your life!