What is your earliest recollection of money from when you were a child?

For me, receiving pocket money to spend on snacks and candy during break periods is the first thing that comes to mind. Towards the end of my adolescence, I began to set aside a portion of my savings to purchase things that I wanted. For the most part,  the focus was on extravagant spending,  saving religiously, or both. However, no one taught us how to manage our money at a young age. Conversations about money are frequently hazy and lacking in reality.

To manage your money better, all you have to do is cut expenses, increase your ability to invest and save, and set financial goals. In this article, we’ll look at how you can improve your financial discipline and money management skills. Here are five money management tips for beginners that you can explore:

5 Money Management Tips for Beginners   

Track Your Spending

Having control of your money is to know where exactly your money goes. Spending as you go without knowing where your money goes comes with consequences. You either slip into a circus of living from paycheck to paycheck and never fully attain financial freedom. It is important to have a clear picture of how much money is going out of your accounts daily. You may not realize how much money you spend on coffee, transport, food, or clothes until you track the data.

The first step to tracking your spending is to categorize your expense into fixed and variable. Fixed expenses represent a chunk of your budget and are less likely to change monthly. They include utility bills, data subscriptions, laundry, groceries, e.t.c.  While variable expenses represent those daily spending decisions like eating at restaurants, buying clothes, hangouts with friends, uber rides, travel, e.t.c, which can differ from month to month.

Here are ways to track your spending

  •  Use a separate spending account where bills will be paid from. You can contribute a set amount to this account each pay period, this way, you know that all the essentials will always be taken care of without dipping into other funds.
  • Track as you go. You can keep a spreadsheet or have a note on your phone where you check off expenses and write down each transaction as you spend. If manually inputting what you spend doesn’t work for you, you can use budgeting apps to automate the process, making it super easy to keep tabs on your spendings.
  • Set limits and reminders. Understanding how much you spend on specific items might help you create a reasonable budget for the coming week or month. This can help you avoid overspending. Knowing when recurring costs will occur allows you to create reminders and save money away to handle these obligations.
  • Spend less with cash. This is because spending with cash isn’t recorded automatically. Unlike when you use a debit card. You can review your electronic records once a week and easily track your spendings without any hassle.

Build a Saving Culture

Saving culture is a way of life that allows you to develop a disciplined approach to money management. Put your money together instead of succumbing to these narratives: “You only live once” or “You can only save when you earn more.” Stop waiting for a better-paying career or the ability to live a certain lifestyle before starting to save money regularly.

To build a saving culture you need self-discipline. Discipline happens only when you can do so much with the little you have at the moment. Saving culture isn’t something you grow to have when you start earning more or living a certain lifestyle. Rather it is about forming a habit that lets you manage your money judiciously in a way that makes your life better.

You can also discipline yourself by automating your savings. There are mobile apps that can help you track how much you save on a daily or monthly basis like Zimvest that also lets you earn as you save to reach a targeted goal.

So let’s say you want to save a certain amount of money but you keep falling short of your goal.

Here are some ways you can motivate yourself to get those savings going

  • Remind yourself why you’re saving up, e.g. for Christmas, an event, or tuition, etc.
  • Take little steps. You can’t save it all up in one day so decide on an amount and stick to it.
  • Keep track of your progress. Get a notebook or journal and record every time you save.
  • Reward yourself! When you reach a milestone, treat yourself to something nice.

Set Financial Priorities

Just like meal planning, set financial priorities according to preferences. This structure helps put in check each of your financial goals and allows you not to overwhelm yourself with responsibilities. It also helps you to prioritize, so you know what to fund first.

Set a financial goal by grouping them into short or long-term goals. Let’s say you have a short-term goal, start with something small and achievable like planning for a vacation or building an emergency fund. Then for your long-term goals, plan for something big enough and would more likely take a longer period before actualization like buying a house or retirement.

When creating these priorities be unique, don’t try to duplicate your financial goals with someone else’s. This is because everyone’s financial situation is not the same. No one has the same bills, rent, income, or lifestyle.

You can create a financial goal list that goes like this:

Emergency Funds

Saving will go a long way toward assisting you in dealing with any financial emergency that may arise, such as medical demands, car problems, the need to change phones, job loss, and so on.

Emergency savings are meant to protect you from becoming stuck if anything unexpected occurs. However, the funds allocated to it would depend on how much you are willing to allocate it or how much you earn.

Retirement funds

Saving for retirement is a goal you may be working towards your entire life, so don’t worry about how early or young you are. As long as you earn an income every month, set out a certain amount of money.

You can start with little, as you increase your earning power during your career then take the amount up a notch.

Making sure that you save a small percentage of your income over the years allows you not to worry about making a living the life you want after retiring. That way, you can relax after retiring and travel the world.

Plan for Fun

While most financial goals focus on responsibility, you should always strive for at least one “fun” objective. This could be a vacation, a big-screen TV, or something extravagant you want.

You deserve to reward yourself with entertaining savings goals if you work hard and save properly. Working toward something you genuinely desire is also an excellent approach to develop self-discipline and goal-setting skills.                 

Invest as Much as You can

Unlike savings, investments are often for the long term like 3 years, 5 years, and above. Although, you can choose to invest for a shorter duration of time where you can decide to invest small contributions monthly.

But before you start investing, understand your capacity. Capacity in this sense is how much you earn. Let’s say you earn ₦50,000 monthly, investing ₦25,000, which is half of your income, is absurd.

Don’t attempt to save all of your money because you want to be “prepared for the future”. Rather do what suits your current lifestyle while you upgrade your income.

Also, it is important to look before you leap, don’t fall for Ponzi schemes or high return investments with little or no information on how it works. What I am saying, if it seems shady, walk away.

Use a trusted investment platform that is an SEC-licensed Asset Manager. Wherever you invest should feel safe, at Zimvest you can trust your funds to be secured. As a beginner, your primary objective should be to retain your capital, therefore you should avoid investing in any asset you are unfamiliar with. Even if you feel like you perfectly understand the asset, make decisions as a beginner based on the risk involved.

Amp Your Earning Power 

Above all, the most important lesson is to amp your earning power. This is because when you earn more, you get to save and invest more, and set higher financial goals. If you think you deserve to be in a better place with your finances, then you would have to earn more than you are currently earning.

Don’t get stuck in an income rut, explore possibilities and be open to opportunities. Here are some strategies to help you amp your earning power:

  • One of the simplest methods to significantly increase your income is to ask for a raise at your current workplace. Don’t be afraid to start this conversation with your boss, if you have stellar performance at your company.
  • Owning a business is also another way to boost your income. Find something simple to run that wouldn’t interrupt your day job.
  • You can also work a side gig. But also consider the flexibility of the jobs you apply for, don’t overwhelm yourself with having too many jobs.
  • Other ways to grow your income include switching jobs – when getting a raise doesn’t pan out well. Even if you haven’t gotten extra certifications or have enough experience to land a higher position, don’t be afraid to go for it regardless.

Finally, strive to earn more, save more money and spend less.

Conclusion: 

It’s easy to feel overwhelmed if you know you’re struggling with managing your money.

It’s tempting to spend as you go and ignore your bank statements and forget to set aside contributions monthly.

So, take a deep breath, and think about how your life would be if you put your finances together and how it’s currently. Do you see the difference?

Once you’ve done that, you’ll have a better idea of what you’re up against and what you need to do next. Now it’s up to you to take control of your finances or would you sit back and watch it rot.

To begin your journey to financial freedom click here