Low Income Money Management

One of the most important ways to protect your financial position is to effectively manage your money. No matter how much money you have there is almost always a way to manage it in such a way to make it work better for you. If you are in debt proper money management can even help you get out of debt and ensure that you are prepared for anything you want to do in life.

Money Management Services
In the last couple of years, different money management services have sprung up across Australia. These services provide budgeting help, bill payment, credit repair and a host of other personal finance elements. The one thing to think about when engaging these services is – is it worth the money and is this something I can do on my own. Paying someone to micromanage might not be the best solution or good value for money. That being said, sometimes it is better to have someone help you control your money if you have poor financial habits and no will power.

Do note that there are many free professional money management services available – organisations like the free financial counsellors of Australia, Centrelink themselves and a host of non-profits. Whatever options you prefer, the key tactics and learning which will be taught are below

 
Budgeting
One of the core concepts of money management is being able to budget effectively. If you have never prepared a budget for yourself you are definitely throwing money away. A proper budget is developed in a way that helps you understand your spending habits, helps you realise what you value in life and keeps you focused on those important things.

Before attempting to prepare a budget the best way to understand if it is within range of achieving your goals, you should conduct a survey of your expenditures. For a month, track all your expenses, from your major expenses like rent, utilities and groceries to small expenditures like coffee and eating out at restaurants. This exercise is to help you understand what you are actually spending on different items in a month. Add up the expenses into different categories and see where you may be wasting money.

Doing this exercise will help you not only cut back in areas that may have surprised you, but also provide a realistic budget in these areas that you can live with. Doing a budget before this exercise will often set you up for failure because it is not representative of your actual spending habits. Have you heard of bill smoothing?

Spending Restraint
One of the second most important parts of money management that is not mentioned often enough is being able to restrain your spending. If you are already on a limited budget, learning to only splurge once in a while in small ways will help ensure that your long term goals are met sooner. It is your discretionary spending habits that truly can make a difference between continually going into debt and saving for what you want in life.

 
It may not seem like it, but a coffee a week at $2 can add up to over $100 a year. Yet that same expenditure daily can end up costing your budget over $700 a year. It is these guilty pleasures that can often rob your future goals from coming to fruition. Instead, the next core concept of money management is the ability to make it work for you by saving it and investing it. Put as little as $25 a month away into a retirement savings vehicle can make a huge difference if you start as early as possible.

Money management is more than just budgeting and showing restraint, it is truly about learning to make your money work towards your goals in life. From buying your own home, taking vacations, or buying a boat, camper or other asset, money management can make it happen.