When it comes to money, my friend Christy has it all together. She has a good job, beautiful apartment, takes fantastic holidays, and treats herself to massages and spa days with impressive regularity. And she never seems to worry about money. She’s just turned 35 and is totally relaxed about the future. The other day over lunch, I learned that it wasn’t always like this. Christy graduated from college with $50,000 of credit card debt and couldn’t afford McDonald’s, let alone a massage! How did she make the change? With a few simple steps that you can follow too.

Five Simple Steps to Manage Your Money Effectively

  • Manage your cash flow wisely: How much money comes in reliably, every month? How much are you spending every month? If the first one is smaller than the second, you are in trouble! Use a budget planner, decide what you really can afford to spend, and start living within your means. Saving for a rainy day is important; spending in anticipation of a sunny one is silly!
  • Invest for the future: While it’s never too late to start saving for the future, it’s never too early either — and no amount is too little. The earlier you start, the more time your savings has to grow, through the magic of compound interest. My grandfathe
It's Your Money - Make it Work for You
  • It’s Your Money — Make it Work for You
  • r taught me to save 10% of anything I earned. As time went on and my income grew, this percentage increased. But I still save a little bit of everything, no matter what.
  • Pay down your debts: When you are in debt, like Christy was, you not only have to pay the amount you borrowed, you pay interest too. It’s an extra cost and you get nothing for it. So pay down your debts as quickly as you can, and don’t take on new ones. If that means cutting up your credit cards, do it! Once that debt is paid off, you can save the amount you used to pay, or spend it on something worthwhile.
  • Set Financial Goals: Want to own your own home? Dreaming of a week-long holiday in Thailand? Need a new car? Want to be debt-free? When you know the money is going for something you really want, it’s easier to resist spending it. Write down your goals, prioritize them, and track your progress. Consider a separate savings or investment account just for this purpose, so your progress is obvious. Put as much as you can into this each month. Find other ways to motivate yourself to save: search out neighborhoods where you might want to live and look at some apartments. Look at the travel options for that vacation. Or start test-driving new cars. When you reach your financial goal, you’ll be ready to make that dream come true!
  • Work with a good financial advisor: Ask friends and relatives for recommendations: you want an advisor you can trust! Listen to their advice, ask questions until you understand what’s on offer, then make your own investment decisions. You stay in control of your money, and you learn about different investments from someone with expertise.

Sure, financial management can be a lot more complicated than this. But it doesn’t have to be! Start with the basics, get good advice, and stick to your plan. If you can add and subtract, you can do this. What are you waiting for?

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