Managing money need not be difficult if you follow my simple tips
How improving your ways of thinking can help you save money
How simple planning and discipline can save you from financial disaster
Straight forward advice you won’t find in any other money management article.
KNOW! You’re a teen or young adult and you certainly don’t want anybody to tell you how to manage your money! Your mother taught you the basics about money management and that’s all you need to know. So far, you feel you’re in total control and nobody can tell you anything you don’t already know.
Perhaps you read articles or seen videos about how to manage your money and found them rather boring. They may sound have sounded complicated or created for someone else, but not you. But in this article I speak to you in a simple manner and tone you can understand. I’m not out to change your life, but rather to offer simple suggestions on how to avoid winding up broke or even bankrupt in a matter of years.
Everyone goes broke at times and IT SUCKS! It happens to the best of us again and again and again and again. And although we know basic common sense about managing money, for some reason, we find ourselves suddenly broke. Sure enough, you’ve experienced times when you were down to your last ten or twenty dollars until next payday. So I have written this article to help prevent this from happening to you again. You still want to know that you’ll have enough money left over for all the other things you consider important when managing money.
So please take a few minutes of you time to read it through…or at least scan the headings before you decide to click off! There’s a lot of great tips in this article that the average person never thinks about and reading them will cost you nothing but a few minutes of your time.
Me Go Bankrupt? No Way!!!
That’s exactly what I used to think in my twenties. I was a young, hard-working young and spent my money responsibly, well so I thought. I never borrowed money from anyone for any reason and I was always able to meet my obligations.
Nobody decides to file for bankruptcy years from now! No one was born to do so. Still it happens to hundreds of innocent people everyday.
However, I was lucky enough to inherit money at age 25 and was so accustomed to always having it that I would join numerous programs and had a gym membership and black belt contract in karate. Meanwhile, I would buy stereo equipment, CDs, and clothes fluently, using my credit cards as an attempt to build credit rapport. I always made my monthly payments when I received my credit card statements so I figured, why not?
In a matter of a few years I drove myself into bankruptcy. How I wish I could go back in time and teach myself the money managing skills I know now. If I could, I would have never had to file Chapter 7 in the first place. This adversely affected my credit rating for seven years. Nothing I can do now. It’s all water over the dam. That is why I wrote this article.
Imagine yourself swimming off the beach in an ocean. Everyone you know is on the beach watching you so you want to impress them by showing them how far you can go out and swim while still being able to make it back to shore. The further you go out, the more impressive you are. Now pretend there are containers holding brand new merchandise. If you go out and grab one and bring it to shore, whatever’s in the bin is yours. As you swim out to grab one, you realize that you’ve gone as far as you feel you can go.. Now you decide to make your way back to shore only to find that you are repeatedly swept back out by large tidal waves. Now what do you do?
Managing money is a lot like swimming in the ocean. When you’re within 100 feet from the shore, swimming is easy and you’re in total control. It’s all the same when you rack up your first $500 dollars of debt. You decided to pay it off by making $50 payments for the next ten months. Unfortunately, bad things happen during those months making it difficult to keep making the payments. For example, your car breaks down and it’s costly to fix. Your computer craps out and now you have to spring for a new one. Hence, these unforeseen circumstances are much like the tidal waves that sweep you further away from shore. You never can tell when they’re coming or how powerful they are.
Now you’ve had it! You realize you can’t afford to take on any new debt. On the other hand, you’re getting exhausted and realize you better make your way back to shore or you’ll drown. When financial disaster strikes, the damage may be severe. Now you have no choice but to put your dreams on hold just to keep your head above water. There’s no shame in that. It happens to everybody sometimes, no matter how well they manage their money.
Now let’s say, as you’re struggling for your life to swim back to shore. You have a device in your hand to call for a lifeboat to come out and save you. But there’s a catch: If the paramedics must save you, you’ll be faced with harsh restriction for the next seven to ten years.
So, you finally gave in and was rescued because you certainly didn’t want to drown. Your name may be spread to other lifeguards and you may not be allowed to go to other beaches in your state as well. This is what bankruptcy is like!
Discipline Is Key to Managing Money
We all partake in impulse spending, not just teens. When it comes to managing money, I’d say better than 95% of us have some room for improvement. Everyone loves to go out and have fun of course and some make this their number one priority. And when it’s time for having fun, do it or die! Everything else can wait. We’ll find a way to get everything done and paid for in the end. Or will wThis is one thing that I wish I knew years ago.e?
Fear of missing out (FOMO) strikes the vast majority of us. If there’s something going on around town, we have to take part in it. If there’s a party going on somewhere, we gotta check it out. And it’s not only entertainment. We have to take part in the latest trends, gadgets, video games, music, concerts, movies, and the like. Meanwhile, we like to dress stylish and drive nice cars. At the height of all this excitement, everything we learned about managing money has gone out the window.
I’M NOT SAYING DON’T HAVE FUN! Just maintain a realistic mindset when you do. Don’t make lofty purchases, especially to impress others. So you see something you really like, think it over before you whip out the cash or the plastic (if you’re fortunate enough to have it). You don’t need to impress anyone and you rarely ever will by trying. And if you’re broke, there’s no shame in that. Everyone goes broke again and again and again through their youths. I’ve been broke more times than I can count and had to live off of a few dollars until I got paid next.
Document Your Purchases Every Day
This is really simple and will take only minutes of your time.
At the end of each day, write down what you spent throughout the day. I know that this sounds like a major inconvenience and perhaps makes you look like a nerd in front of your friends. However, it’s not as hard as it seems and once you’ve been doing it for awhile, you won’t want to stop. It’s like being your own bookkeeper. Best of all, if you forget about something you bought days or weeks ago, you have written evidence with your financial log.
If you have access to a computer, there are numerous software programs created for budgeting. Also, if you are well versed at using a spreadsheet, no matter what operating system your computer has, it comes with its own version of Office. On the other hand, if you absolutely HATE computers but use a cell phone, there are note-taking applications you can use. However, all you need is a pen and some paper. A plain notebook will do.
Keep track of everything you buy on a daily basis. All it takes is five minutes, if even that. You can write down all daily purchases before you go to bed at night or when you get up the next day. If you’re not so good at remembering things, write things down as they happen on a pocket-sized pad or booklet.
At the end of each week, go over your records and analyze each purchase. Organize them in a simple list or chart in three categories according to how much you needed or wanted each item. These categories will be something like: 1) NEEDED 2) URGENTLY WANTED 3) NICE TO HAVE.
NEEDED – These are the things you couldn’t do without. For example, auto insurance, tags, car maintenance, new shoes, laptop repair, school supplies, etc.
URGENTLY WANTED – This can be anything you wanted really bad big or small. For example, new game console, snacks, drinks on hot days, trendy outfits, computer apps, etc.
NICE TO HAVE – This can be anything you bought that you really didn’t urgently need. Quite often, you’ll run across discounted items or find deals on used items online. Sometimes, you’ll see things in gift shops or convenience stores that’ll seem neat to have even though you’ve gotten along fine without them. For example, less popular video games, DVDs, CDs, minor computer or phone accessories, and the list goes on. You may be surprised by how much you spend on things that simply sit around and collect dust, because they’re never used.
Now that you’ve made your chart, go over all the items and try to find as many things as you can that you could have done without. Imagine if you were able to return and get a full refund for anything on your chart. What items would you return? List them all in a fourth category and add them all up. Now subtract that total amount from how much you spent that week. How much extra money would you have? Doing this can help you analyze your spending habits and will enable you to spend your money more wisely in the future.
Do this on paper, not in your head! Handwritten notes or computer entries serve as a visual cue that you can come back to again and again. But if you try to memorize all your expenditures, you’ll forget some of them and end up with incomplete info to work with. Hence, you might as well not try to budget at all.
Make a Want List of Only Things You Want the Most
If you’re like most teens, you have an enormous list of things you want. And trying to buy all these items now would require a massive amount of money, money you don’t have! You see merchandise in stores, you browse gadgets online, you see peers toting the newest “gotta-have” gizmos. These can be things like the latest iPhone, game console, Apple watches, name brand jeans, motorcycles, and the list goes on and on. As you discover these new treasures, you might even get a rush of euphoria. Just picture what your life could be like if you had everything you wanted.
There’s nothing wrong with wanting these things! After all, you’re only human. For me, and we’re talking nearly 40 years ago when I was a teenager, it was a component stereo system and hundreds of record albums. Things were much different back then and we didn’t have half the accessories we have today. There were no cell phones and home computers were expensive, oversized, but not very powerful. VCRs were not so commonplace and costed upwards of $700. Only the most affluent families could afford these things. Still, we seemed to get along fine with the basics as that was all we knew.
No object on the market today can change your life forever. Only you can do that!
However, you must realize that having these things isn’t all it’s cracked up to be. Sure, you’ll be thrilled to own them at first. But are you ready to adapt to change? Unless you’re up for the challenge of setting up or configuring new computerized electronics, they can seem complicated at first. After owning and using these things for several months you may not seem to notice any improvement over the old equipment you had.
Also, these things can wait until you can afford them. Most will still be available in stores or online years from now. And if not, there will be improved versions of them with even more features than before. Just because you can’t buy them today, doesn’t mean you’ll never have them!
But I’m not here to change your mind. Simply make a written list of all the things you want. Order the list from the things you want the most to least. For now narrow your list to as few as possible. The fewer the items, the better.
Make a Plan to Pay for Each of Them
So you’ve decided on something you really like to have. Hopefully, you researched this item just to see how others who use it like it. And if you’re still convinced you want it, your next step is to draft up a plan on how you’re going to pay for it.
If it’s a low cost item, say under $50, you can easily make an arrangement to pay for it in cash. Even if you’re on a tight budget, you can set aside a low amount like $25 a week and keep that money in a safe place until you have it all saved up. So you won’t be able to enjoy whatever it is today. It will still be the same item it is a month from now and you can use it to your heart’s content.
If it’s a large ticket item, say over $100, you may want to consider an installment plan. Many ecommerce sites offer them and often at a lower interest rate than you’ would pay using a regular VISA or Master Card. Some stores have their own credit cards and offer perks to frequent buyers. If the payment terms are better, than regular cards and you can qualify, then you may want to consider them. If this item is sold at a local specialty shop, you may want to consider buying this thing on layaway. This way you make monthly or weekly payments without interest and pick the merchandise up the day you make your last payment.
However you decide to pay, whether stashing cash in your to top drawer or buying on installments, make out a written plan as to how it will fit into your budget. Calculate this into your budget to determine how much money you’ll have left after this newly added expense. You may find you’ll have to make sacrifices just to pay for your newfound treasure. That’s up to you. If you fail to do this, you’ll be spending money blindly and before you know it, you’ll find yourself broke again.
Avoid Spontaneous Purchases
It is advisable to buy only the things you plan to buy. All too often we have urge to browse ecommerce sites or walk through stores with no intention of buying anything. Other times we go to garage sales, thrift stores, or flea markets just to see what we can find. This is OK occasionally if you are not hurting for money However, buying things on a whim can cause you to go broke unexpectedly, especially if you’re on a tight budget.. Worst of all, you can suffer a financial blow if you spend on impulse without having a documented budget.
And it goes without saying, anything you purchase while browsing for pleasure, you never really needed in the first place. It’s nice to find discounts on nifty items that you might love owning, but having these things won’t really serve any significant purpose, especially if you didn’t budget for them. Hence, it’s a major drag when realize you spent your lunch money for the week on discounted PlayStation games you never intended to buy, especially when you can’t return them.
We all make spontaneous purchases from time to time. Thus, it is advisable to avoid situations that lead to such decisions.
Things You Should Never Purchase
There are a lot of (what I like to call) “fake products” out there.
Many advertisements you see online sell products that promise miraculous results in short periods of time. They claim to help you in ways not even specialists or professionals can. Rarely, if ever, do they promise what they deliver.
Infomercials have been a traditional way of advertising in the 1980s and 1990s. They were commonplace back then because most households didn’t have internet access. By running shows for hours at a time, they featured a low cost product that could improve your health, help you cook better, lose weight, get in shape, learn a trade, etc. They even had testimonials as evidence that their products work along with a money-back guarantee. All you needed to do is buy their featured product, say for $29.95, and it work wonders for you.. But once they got you on the phone, WATCH OUT!! They would try to sell you improved versions of that product and additional supplements to get the results you want. Suddenly, the next thing you know, that $30 you intended on spending turned into $230.
Today, you’ll see online ads that promise vast improvements if you use their simple method. They are simply “click bait.” They’ll post several pages that you must read before they reveal their “simple method.” Meanwhile, they’re testing your patience and burning up your precious time as they make you jump through their hoops. When you finally reach the end this “simple method” is a product (usually a drug) they’re selling.
Avoid drugs sold online. There are so many medications and pills sold online that promise overnight improvements in your health. Many promise to help you lose weight, tone your body, or grow back lost hair. Many of them are made by private companies and are not FDA approved. You never know what ingredients are in them and how they’ll affect you. Bring these “miracle drugs” to your doctor and most likely, they’ll laugh in your face or act like you’re from a different planet.
My advice: If you want to lose weight, see a dietician. If you experience pains anywhere in your body, see your doctor. If you want to learn a trade or profession, find a class or college you can enroll in. Because everyone’s body is different, there is no “one size fits all” cure to improve one’s health.
Limit Credit Card Purchases
And now I’m offering advice on what I wish I know back in the day. I’m talking about my first few years of having my own credit cards. I see something I really liked in a store and my first instinct was to pull out the old plastic and buy it on the spot. I bought a lot of things with credit cards, a few things I really wanted and mostly things I kind of wanted. Many of the things I bought, I never gave much thought, I just purchased them on impulse. And a short time later, I lost my appeal for them and they were taking up space in my closet. I couldn’t return them after having them so long so I gave or threw many of them away.
I even used credit cards to buy things that I had the cash to pay for. I wanted to make sure I had enough cash on hand until next payday.
It’s best to avoid using them whenever possible. Sometimes you will have no choice. There will be emergency situations when you must make an urgent purchase and your last resort will be to pay by credit.
Needless to say, credit cards are a convenient way of paying for things. They’re the most evil financial instruments that are specially designed to make their banks rich. And even though we know it’s in our best interest to use them as little as possible, sometimes we can’t resist but to do so when we see something we really want. Suddenly, everything we learned about budgeting has “gone out the window”.
Though the interest charges as listed on your statements may seem small compared to your total running balances, they build momentum in the long haul. . The interest adds up over time and compounds over the principle debt that remains unpaid. So like the ocean analogy, the total amount owed on them is like the distance you swim away from shore. The interest and fee charges are like the tidal waves that try to sweep you away as you try to swim back.
And in reality, credit cards are made to keep consumers in debt. I’ve had a number of them over the years and I don’t ever recall paying them back in full. The only way to get rid of the debt is to take out a home equity or debt consolidation loan.
Good thing we have debit cards. Though we can’t hand online merchants cash nor pay by check, we can use them as an equivalent form of payment. Though the purchase amounts decrease the balance, there is no interest for using them. Everything is bought and paid for. Just make sure you have enough funds in your bank before you buy.
Rest On Your Laurels
Before even reading this post, you likely have gone in debt purchasing things you felt you needed and really wanted. If you should find you’ve gone overboard, especially on frivolous items, you can still manage OK with some degree of discipline. There is hope for you as long as you commit to curtailing your spending habits.
You ought to consider going months at a time without making extravagant purchases. Sometimes you have to lay low and make the most of the things you already own. I know this doesn’t sound too pleasing, but that’s reality. Everyone has times when they can no longer afford buying things at the rate they have been doing in past months.. We then must learn to conserve and appreciate the things we have. So for example, if you own a PlayStation 5 console and several games released in the last year, it’s best to pay down the debt you already incurred before buying more.. Instead of focusing on the latest games and accessories you see in stores, you can spend more time playing the games you already own and become even better at them.
Even your friends and peers face times in their lives where they have to cut their spending habits and pay off their debts. Though they never talk about their finances, they are just as likely to face hard times as you are. And it’s not just material items, it’s entertainment as well. If they beg you to go out to the bars or restaurants frequently, there will be times when you must tell them “no”. Sometimes, it’s just best to spend evenings at home. If you must, this is a good time to make use the things you already own. Likewise, they should do the same. With all the gizmos and gadgets your family amassed, you might discover nifty features you never knew they had.
Try To See Things from Your Parents’ Point of View
Do they seem to be satisfied with everything they own? Would you be happy just having what they have and nothing more? Could you live happily on their possessions alone?
Teens often attempt to set high standards for themselves. They want things that their parents can’t even afford. So, for example, how can you expect to have a new luxury car when your mom or dad never had one?
Chances are, your parents seem to be content with what they own. They may not have the latest and fanciest gizmos and gadgets, drive classy cars, or dress in the latest fashions, but most likely they get along just fine with what they have. Even if they never express their feelings of wanting better things, most likely they do. Unless they have high paying jobs and can afford anything their hearts desire, they have no choice but to make do with what they have.
Remember, if you’re parents are average, they can’t have everything they want. So how can you expect to?
Here are some key tips to remember when managing money:
- Document, document, document. Keep written notes of all purchases you make on a daily basis. Without written records, you are spending blindly and likely to find yourself broke until next payday.
- Review your past purchases to determine which ones you can do comfortably without.
- Make a list of the only the things you want the most. Narrow it down to as few as items as possible.
- Rather than using a credit card, find an alternative way to pay for these things. Consider installment plans or buying on layaway.
- Refrain from buying things sold through infomercials or online ads. If something sounds too good to be true, most likely it is.
- Keep spontaneous purchases at a minimum. Avoid buying things you never planned on purchasing earlier.
- Try not to use your credit cards unless in emergency situations.
- Go periods of time without making lucrative purchases. Take time to pay down your debts and make good use of the things you already own.
- Reduce the amount you spend on entertainment. Don’t be afraid to tell your friends “no” if you can’t afford to go out.
Managing money requires great planning and discipline. The thrill you get buying an item you’ve been craving will soon wear off. Some of these objects may not be quite what they seemed to be when you wanted them. And you may eventually realize that you didn’t need them as much as you anticipated.
And most of all, don’t forget my ocean analogy. After all, you don’t want to end up drowning in a sea of debt.
Did I miss anything here? What financial advice do you give your kids?