Tips on how to manage finances wisely?

Answer 1

On a monthly basis - do not spend more than what you earn.

Answer 2

As mentioned above, there are good debts (mortgage on house) and bad debts (credit cards). Credit cards are not bad things if handled properly. Many people in my generation (and older) didn't understand how to use them because they were new to us. When you get your first credit card, keep tabs on what you spend each month. Verify it against the statement, when it comes in. Pay it off in full -- *every month*. Don't ever give them a chance to charge you interest. This is only part of having a debt free life. The other part is having savings built up so that, when large expenses happen, you're ready for them. It sounds silly to tell you to start saving for your retirement now, but if you sock away everything you can into RRSPs now, you will be in a *very good* position when you retire -- or even if things are difficult before then. I had to do that this year, until I found work in my new city. I didn't start saving for my retirement until I was in my 30's and I still need to save a lot more now. If I had started saving into RRSPs with my first job, I would have everything I need now for retirement -- because the money there is building up interest the whole time. You don't have to lock your money into RRSPs just yet, though. You can set up your banking with two accounts. One is your working account and one is your savings. They can both be savings accounts, if you like, but one will be very active and the other will see some money going in every payday -- and nothing coming out, except for emergencies. One thing you can do to help your parents, is offer them some of the money you earn each month to offset the expenses they incur on your behalf; food, clothes, gas for the car, etc. This will also help you learn to pay basics first, like rent, utilities, etc., before you have the money for groceries, clothes, savings, etc.

Answer 3

Interesting that you say "manage finances" instead of "build wealth" or "achieving financial freedom".

There are 100s of tips to help manage finances, like budgeting, carrying less cash/credit cards, eating out less, spending less on entertainment/luxury items, downshifting to cheaper brands & vacations, buying secondhand and not new, etc. IMO, cutting expenses & costs as much as possible is the most important thing.

But I think it's more important to get into the right long-term frame of mind, the "build wealth" state of mind. If you really want to build wealth, you're going to have to go on a strict financial diet (that's how it'll feel for first-timers), and that takes a clear, disciplined willpower + mental attitude. You're going to have to cut the financial fat from your life, and it might not be easy at first, since you're probably used to having the fat of all your expenditures.

Clarify your financial goals (financial security/freedom, etc.) and remember them every time you make a purchase, asking yourself, "Is this really necessary for my life? Do I need this to live?" Usually, that answer is no. If having little or no money in your bank account worries you, then which is more important, the new pair of shoes or the extra $50? All the little things add up, not just in life, but also in your bank account.

It might seem scary and painful in the beginning to cut costs, but actually it's about discovering and getting back in touch with what's really important in your life - your friends, family, yourself. Because hey, when you cut back spending on all fronts, you're basically just left with your raw self and your relationships.

If you go without spending more often, you'll find that you'll end up having more, and being more. What you lose in spending, you'll gain not just in your bank account, but also inside yourself - less worry, less stress, less needy, more clarity about what's truly important in your life. And of course, being financially richer.

Answer 4

Keep a diary of every penny you spend for a few months, then you can analyse your spending and create a workable budget.

Answer 5

Create a budget
Simplify your living expenses
Get out of debt and stay out

Answer 6

Stay out of debt. Save money.

Answer 7

Buy Microsoft Money.