Learn How To Manage Your Finances

I recently started a YouTube channel where you can learn how to manage your finances and on that channel I will be sharing how I budget my salary and side hustle incomes using my weekly and monthly budget trackers. Because the first step to successfully managing your finances is ensuring you have a budget for your spending and your savings. Over the last few months I have been sharing countless posts on money on this blog and Budget with A July Dreamer – a Youtube channel felt like a natural progression. I am excited to embark on this journey sharing tips on budgeting but also helping you to learn how to manage your finances.

Learn(ing) how to manage your finances has to start off by busting off some myths that (1) you need to be really good with numbers to maintain a budget – wrong, you should be able to count sure but a calculator is good with numbers. (2) Men are better at managing money than women – wrong, I know some men who are so bad with managing their money it hurts my eyes, everyone can be good with money and everyone including you can learn how to manage your finances. (2) I don’t need to learn how to manage ‘our’ money, my (insert spouse) takes care of it (normally husband) – wrong, its good that someone is good with managing your money in your household but its equally important you are both aware and take time to learn your budget.

Disclaimer: I am not a financial advisor, if you need financial help seek a qualified professional. All opinions shared in this post are my own and based off my own experience.

Learn How To Manage Your Finances

When I was in high school, I learned my first lesson about managing my finances money when I went shopping with my school friends. My mum had given me only £20 which 15 years ago you could stretch the money especially for the things we wanted to buy. I knew that my friends would have more money than me so I bored a £5 from my brother and I went to my room to plan how to spend my £25. I budgeted that for the return bus ticket for a student, I would spend £2.5, MacDonal’s meal was £2.10, a couple of earrings in Claires would be £1 for 3, £1 for headbands and then I wanted trainers which were £5 from Asda George and 2 cute tops from New Look for £3 each. That brought my grand total to £17.60 and left room for spontaneous buying of £2.40 plus the extra £5 from my brother which in the end I did not even need.

The moral of my story is that I learned from a young age how to manage my money but it doesn’t mean I was always perfect, no. I have shared on this blog how I got into and paid off my almost £12k debt using Dave Ramsey’s Snowball Method whereby I wrote down all my debt, agreed a repayment plan with the 11 leaders I owed money to and started making extra payments to the smallest debt I had. Instead of it taking me 3 years to clear my debt, I was able to pay it all off within 18-months on a low income without a side hustle but with careful planning and relearning how to manage my money. I shared on here what I use to track and manage my money and I will go a little bit further and help you learn how to manage your finances.

Set up a Budget

Setting up a budget is the first step in understanding your financial diet and knowing where you currently are, what needs to be cut out of your diet and shows you at a glance if you are in good financial health or obese. Setting up a budget doesn’t need to be complicated, you can either write it all down in your notebook or use a tracker like I do. I recently shared a video on my channel on how you can use my budget tracker, it is very simple and can be adapted to meet your needs.

Follow the 50-30-20 Money Rule

The 50-30-20 rule was created by Senator Elizabeth Warren and her daughter in their book ‘All Your Worth‘ and its one of my favourite and most realistic budgets that I follow. The rule basically advocates that you spend 50% of your income on your essentials like rent, food (not takeout), utilities and the like. Then allocate 30% of your income towards your wants so this could be your Netflix, shopping, childcare and so on. The final 20% should be allocated to paying off your debt or saving your money for literally anything. I personally switched the 30% and 20% allocation, I save 30% of my income and use 20% for my personal expenses. The 50-30.20 money rule is only a guide and not written in stone but helps you manage your money and allocate it better.

Follow an All-Cash-Diet

Technology is both our saviour and our doom (according to Olaf) and I am in agreement because with technology everything is readily available. I don’t walk with cash anymore because it is an effort to go get it and an effort to spend it. But because it is an effort, it is one of the best ways to manage your money because instead of click and buy online, you have to physically go out to spend that money and you can’t overspend what you don’t have. Back in my parent’s and grandparents’ day, it was harder to get into debt because you only spent what you had and never got anything on credit because credits were only for the rich. I think more of us should start to lead a life like that whereby if you don’t have the money, don’t get credit just save up and then purchase what you need with cash.

Set-up Financial Goals

A lot of us are used to making lifestyle and health goals but we rarely think about setting specific financial goals. I personally have financial goals and some are as simple as saving £6,000 a year as well as putting aside £2400 a year for travel. When you are setting financial goals you need to add in the numbers and draw up a plan on how you are going to achieve those goals. I drew up my plans in my personal finance notebook, I re-jiggled my budget and found the £700 I needed to be able to achieve each of these two goals. Sometimes your salary might not be able to afford you that luxury and this is why side hustles need to be drafted into your financial goals.

Allocate 5-minutes daily to your Finances

This is something I have been practicing for a couple of years now, this is not about counting your coins but knowing where your coins are going and where they have been allocated. Using my weekly tracker as well as my pen and paper, I am able to track where I am spending my money each single day, how much and where I could cut back so I am able to put more money aside for savings. This doesn’t take me more than 5-minutes, 10 at most if I need to move money around.

When you have a system in place to manage and track your money, it becomes second nature and something that you don’t even think much about. But you need to put the work in at the beginning, get acquainted with your financial health, know where you money is going, where you can save money and allocate money to things that are important to you and that is now you learn how to manage your finances for the future.