It is very important to devise a method of money management to keep your finances in order and avoid problems. There are several ways of managing your money – use a free online system, buy a money management software package or design your own system on an excel spreadsheet.
Using an Online Money Management System – There are many money management systems online – some fairly simple and others with all the bells and whistles. These systems help you to budget, plan your personal finances and manage your debt and of course you can access your data wherever you are. The down side of an online system are the security issues – many people are very wary of putting personal financial information on the web. It is essential that you read the provider’s privacy policy and make sure that they will not pass your personal data to a third party.
Buying a Money Management Software Package – Lots of people will be happy to buy a stand alone software package and there are certainly a lot to choose from. It is a good idea to do some research and get customer feedback on the various packages before making you final choice. You need to decide how simple or complicated you want your system to be. If you have a complex financial situation – multiple investments, multiple bank accounts and credit cards as well as income from various sources – you should certainly go for one of the more sophisticated money management packages. However if your situation is relatively straightforward – salary, current account and deposit account – you should choose a simple package. It takes just a few minutes a day to keep up to date with your finances. The other advantage of purchasing a package is that most allow you to import your bank statements directly to your program and you benefit the excellent customer support offered by most suppliers.
Money Management on an Excel Spreadsheet– If you want a money management system tailored to your needs it’s probably best to set up your own system on a spreadsheet. This is quite simple to do – start off with a column for each month and then label rows with all your incomings and outgoings, add your formulas and that’s about it. If you have more than one bank account you can handle this on a separate spreadsheet and the link the two into a summary sheet.
A Few Final Tips – Most money management is a matter of common sense. When you have your chosen system in place, check your expenditure. Are there any items you could do without if necessary? Do you pay off your credit card in full each month? Do you have a contingency fund to help you cope with the unexpected – washing machine breaks down or car repairs? Don’t forget to put something by each month to cover the quarterly and annual bills such as insurance and car tax etc.