How To Manage Money

Do you want to know how to manage money so that it goes further? Read our advice for employees, entrepreneurs and freelancers!

Financial stability is a dream of many people, whether they are entrepreneurs or not. And in an economy as unpredictable as today's, knowing how to manage the money we have on hand here and now is of the utmost importance.

Although we already know that it is not easy to plan expenses and save enough to build wealth, especially for those who want to start their own business .

In this post, we will share simple tips on how to manage money, dedicated to those who want to have a healthier financial life, even without having a very high budget.

If you adopt at least one of the habits that follow, you will see that, over time, your money will go further.

But, anticipating some information, we will tell you that from now on spreadsheets and calculators will be your best friends.

So, let's see these some tips on how to manage money:

1. Write down your fixed expenses

2. Set aside at least 10% of your income

3. Learn to invest

4. Set financial goals

5. Avoid using your credit card

6. Look for alternative sources of income

7. Buy second-hand products

8. Avoid making unnecessary expenses

9. Create an emergency fund

10. Use financial management tools

Write down your fixed expenses

Fixed expenses are those that we pay every month, such as rent, water, electricity, telephone, Internet, etc. It is important to note that you must include taxes in the list…. that you will not forget!

Having a record of fixed expenses is important to know how much of the family income is left over every month to invest, save or even allocate to rest and leisure.

Likewise, and if you are an entrepreneur , you must also have control of the fixed expenses of your business, such as rent and production costs.

There are several ways to carry out this control, but to begin with we recommend keeping a spreadsheet in Google Drive or Excel, which will allow you to organize, update and save your data very easily, in addition to automating calculations thanks to its formula systems. .

If you are a digital entrepreneur, take the opportunity to download our preconfigured spreadsheet for free to calculate the main metrics of your digital business:

Set aside at least 10% of your income

Before paying fixed expenses, try to reserve at least 10% of your income to invest it. This will be a great way to easily understand how to manage money, in case you don't have much time to do some calculations.

If you earn a fixed monthly salary, this means that you must separate it from it. If you work as a freelancer, that percentage is separated from all your earnings for the month.

The goal here is not just to save money over a period of time until you can spend it on something superfluous, but to apply that value so that it can earn interest and become a significant asset in the future.

At first it can be difficult to “give up” that 10%, but if you focus on the long-term result and manage to adapt your lifestyle without making big sacrifices, in less than a year you will begin to see the first results.

Learn to invest

Investing is a way to make sure you don't spend your money on something superfluous. But when we use the word “investment”, it can seem that we are talking about something that requires a lot of prior knowledge.

Do you think so too? Well, it's exactly the opposite!

Anyone can invest, from people with a more conservative profile to those with a more daring one.

For this reason, we recommend that you study the different types of investment available in your country. Only then can you choose the one that best suits your profile. Also, you can talk to people who know about investments before making your decision.

Some types of investment are:

Savings accounts are successful everywhere because they are easy to open and very secure. Savings, in most countries, have the lowest risk of any other type of investment, but they also have the lowest return potential.

That is why it is recommended to make cash deposits in a savings account to conservative investors, with a lower tolerance for risk.

Investment funds or mutual funds pool money from different investors and then invest it in a variety of investments, such as stocks, bonds, etc.

This type of investment is suitable for those people who can afford to invest thinking long term.

• Actions

Unlike the previous options, the stock market is recommended for those investors with a more daring profile.

The value of shares can fluctuate wildly during the period when the market is open, so it is a risky model.

Stock management requires a deeper understanding of how companies are performing, and ongoing monitoring of the stock market is also crucial.

This way of how to manage money is quite interesting, but also risky, so before you invest, you should learn a lot about the stock market.

Set financial goals

Before moving forward it is important to know the difference between goals and objectives. Although we are used to using these two words interchangeably, they can have certain differences in meaning:

Objectives represent what we want to achieve in the long term, while goals, on the other hand, represent concrete, measurable, time-bound actions.

For example, if your goal is to increase the sales revenue of your business, your goals, in turn, may be to double the number of transactions in the next six months, increase the average ticket of your customers by 50%, etc.

Take this opportunity to read our post on how to set goals for your business.

Avoid using your credit card

Another important tip for how to manage money is closely related to the previous point.

Does that mean you should never use your credit card? Of course not! Credit cards represent a great convenience for the consumer, as well as being the most common online payment method .

Although our advice is that you try to avoid using it when you have cash to pay for something. In many parts of the world, when you make payments on credit (or in installments), you end up paying interest, thus spending more than you would if you made it in cash.

Look for alternative sources of income

Today, there are many activities that you can do at home to earn money. An excellent example is Affiliate Marketing . With it, you promote other people's products in exchange for commissions every time a sale is made through it.

If you are creative and enjoy creating content, you can start a blog and write about something you like. You can also become a digital producer and create an online course to share your knowledge with other people.

Anyone who has a YouTube channel or a profile with a large following on Instagram can become a digital influencer and earn money through brand partnerships, product sales, and ad display through Google AdSense .

To do any of these things, all you need is a computer (and at most a camera) with Internet access. And if you haven't identified yourself with any of the professions we suggest,

Buy second-hand products

With the increasing trend towards minimalism and conscious consumption, buying second-hand items is a way to help save the environment and also to learn how to manage your money through savings.

There are many second-hand stores anywhere in the world, for example, with high-quality clothes and shoes that are sold at a much lower price, with furniture, appliances, etc.

A variety of products can be found online on websites such as Mercado Libre , Vibbo and Segundamano . On these platforms, users put products up for sale and the sites act as intermediaries in the buying process. The same thing happens with e-Bay and Wallapop , although they also sell new products.

You can also join Facebook groups and barter products and services with other people.

Avoid making unnecessary expenses

Have you ever heard the phrase: "If you don't need it, don't buy it?" There is nothing more true than this phrase, unnecessary expenses can lead you to spend a large amount of money without realizing it.

To differentiate an essential expense from an unnecessary expense, just ask yourself the previous question. Generally, you will be able to recognize an unnecessary expense easily, since it is not necessary to continue with your normal life, it depends more on your lifestyle than on a true need.

Unnecessary expenses can not only be important expenses, in fact, unnecessary expenses are usually small, go unnoticed and in the long term directly affect your finances.

So the best thing you can do right now is to identify those expenses, modify them and if possible eliminate them.

Create an emergency fund

Many people tend to spend most of their income and when an emergency occurs, their financial situation is delicate.

Just as in a previous tip, we told you that it was necessary to reserve 10% of your income to invest it, it is also necessary to reserve an additional amount in case emergencies occur that could affect your money.

This reserve is different from the previous one, since the money you have in this fund must be liquid and easy to maneuver, on many occasions, investments do not have these characteristics, that is why it is important to differentiate the investment fund from the emergency fund .

This fund is usually less than the investment fund, but it is important that you take it into account, since it will help you to be prepared for any eventuality.

Use financial management tools

If you're not used to working with spreadsheets and need easier methods to control your expenses, there are a variety of financial management programs and applications to help you.

Some of them offer the option of uploading receipts for payments made by card, tracking bank transactions and even inserting reminders for bill payments. Thus, you have control of everything that enters and leaves your account. For example, interest paid for late payments will no longer surprise you.

One of them is Wallet , a service oriented and designed for those who do not have financial knowledge. It is about introducing the financial movements while labeling them correctly so that they are within the available categories. The result is a simple graph that tells us how we spend our money.

Other options are Fintonic, for iPhones , and Mint, for Android . Both are free apps that help you control your finances by keeping track of all your transactions in one place.

We could add Moneytrackin' to the list , an application that follows the guidelines of the previous ones to control personal finances. The most interesting thing about this service is that in addition to an application, it is a community of savers, so that you can receive advice from other users to achieve the greater goal of properly controlling your money.