When people are asked what the best way to manage money is, they generally respond by saying that saving up is the key to wealth. The problem with this response lies in the fact that saving up may not be your primary goal. Moira Binninger finds out why managing your money well can mean so much more than simply saving up money and investing it in a financial plan of action.
The best way to manage money is the one you will use the most. It’s helpful to have multiple methods at your disposal so that you can choose which one makes the most sense for your situation. Using multiple methods at once can be a confusing mix of advice, but it also allows you to decide whether you’re rushing through your money or taking time to figure out which method actually works best given your unique circumstances.
The best way to manage money
The best way to manage money is to have at least one person in charge of it.
The problem with having a lot of money is that no one person knows what they’re doing. If you have five people in charge of your finances, each of them will try to make the same decisions as the rest of them and they’ll all end up making bad ones. The more people there are involved, the less likely you are going to get it right.
If you’re a sole proprietor, or if you’re married and your spouse is also running your business, then you don’t have much choice but to delegate tasks and responsibilities to other people. This can be difficult because the temptation is always there for us to take over and solve problems ourselves – we want them solved now! But delegation isn’t just about giving someone else something; we need to give them something too: some authority over their own job so that when they do something wrong or incompetent, it’s their fault. This means explaining things clearly, setting expectations properly, and helping them understand how things work (which may require training).
Particularly in business situations where there are multiple owners involved.
The best way to manage money is to invest and save in a 401(k) plan, which is what most people do. That’s because they’re not going to make as much money as they did in their 20s, so they need to save more now.
The second best way is to pay yourself first. If you can afford it and want to do it, give yourself an extra 20% of your income every month — even if it’s only $100 a month. This will help you build up savings faster than if you were just saving from paycheck to paycheck.
The third best way is to have a well-funded emergency fund that’s three months’ worth of expenses if you lose your job or get sick or something else happens that makes you temporarily unable or unwilling to work for a period of time — like being in the hospital for surgery or being on vacation for a week with no income coming in.
When you have a solid financial plan in place, you’re better able to build up your savings and determine how much money you’re willing to spend on specific expenses. This will help you avoid monthly payments for bills that are normally unexpected and draining your bank account. Ultimately, it’s difficult to find an absolute “right” way to manage all of your finances, but the ability to stay organized and plan ahead is key!