Larry Williams can talk about managing money until he’s blue in the face, but ultimately, actions speak louder than words. He has amassed an enormous fortune over the course of his life through mastering his own money management techniques—and he did it all before his 50th birthday!
We have pulled together some of the best information Larry has offered on this topic to provide you with an easy-to-follow guide to help you get started taking control of your finances as soon as possible. Master these money management tips and you’ll be well on your way to achieving financial freedom!
Save 20% of everything you earn
One of the most important financial steps is to save. Saving even a little money will help you get ahead in life. To save 20% of everything you earn, try using some of these money management techniques:
1) Set up an automatic savings plan.
Have your paycheck automatically deposited into a savings account as soon as it’s deposited in your checking account. This way, you’re not tempted to spend your hard-earned money when you get paid. Plus, if you use direct deposit, the money will be withdrawn before payday and won’t appear on your bank statement which might cause you to spend more freely than usual.
Another option is to open a high interest savings account and make sure that your employer deducts 20% from each paycheck for deposits.
2) Add an amount equal to what you are saving monthly for retirement or college funds every time you get paid.
You’ll be surprised how quickly this extra amount adds up over time! For example, say you want to put $100 per month away for college. That’s $1,200 per year.
If you start saving at age 25 and continue doing so until age 65 (retirement), you would have saved $118,000. If we adjust for inflation (using 3%), that amounts to about $168,600 by the time you retire!
Another great way to save is by avoiding excessive credit card usage; after all, interest rates average around 18%.
Don’t buy anything without asking yourself, Do I really need this?
Do you find yourself buying things on impulse, whether it’s a new TV or CD, and then feeling guilty afterward? Do you just want to give up? Start by changing your way of thinking about money. It doesn’t matter if you have a lot or not enough- financial freedom begins with the person using it. Don’t buy anything without asking yourself, Do I really need this? If the answer is no-then wait.
Pay yourself first with your savings plan
A savings plan is essential for financial security. When you pay yourself first, it ensures that you never spend more than what’s in your account. If you wait until the end of the month to see how much money is left and then budget accordingly, you’re at risk of running out of money before the next paycheck. Paying yourself first makes sure that all expenses are paid and only after that should there be any money left over to save or spend on entertainment.
Avoid self-defeating spending habits
The primary objective of spending less and saving more is to create a cushion for yourself. One great way to save is by paying off all your credit cards, which will instantly lower your debt and prevent you from accumulating additional expenses on revolving interest rates.
Additionally, learn to make purchases with cash. If you do not have the money in your wallet, it’s very unlikely that you’ll spend it. Create a detailed budget and track every dollar coming in and going out of your account- this is the most efficient way to get control over your finances.
Have multiple savings accounts for different purposes
It’s crucial to have multiple savings accounts to help you keep your money organized and ensure that every dollar has a purpose. Put more of your money into the account you’re using most often and less in the one you use less often.
Having more than one account also means there will be at least one account with a high balance when it comes time to save for future goals, such as retirement or a down payment on a home.
Look at all the numbers each month
How much money do you make every month? $1000
What are your monthly expenses? $500 – Rent $200 – Utilities $300 – Savings Account $50 – Car Payment $500 – Student Loans
What’s left over after your monthly expenses? $250 . You could buy a new car with that, or eat out a few times this month. Instead of cutting back on your bills and spending less than what you’re making, why not save some more each month so that next year, you’ll have an emergency fund saved up and ready to go when you need it?
Ask yourself how much cash you should have in your emergency fund
What is your current monthly income? What are your fixed monthly expenses (e.g., rent, car payment, phone bill)? How much cash do you need in your emergency fund? A good rule of thumb is to have one month’s worth of living expenses saved up in case something unexpected happens.
The important thing is to have the cash ready so that you don’t get discouraged and miss deadlines when trying to gather the funds.
Use apps to help you stay on track with your spending and saving goals
Some great apps for staying on track with your finances are Mint, You Need a Budget, and Acorns. They help you make the most of your money. All three have free versions that let you see where your money is going and how much you’re saving, and then provide features to help if you want to change habits or make more money.
Mint has bill reminders, budgeting tools, and alerts for unusual spending. You Need a Budget offers in-depth budgeting and goal-setting functionality (including both traditional categories like groceries as well as love goals), plus an automated feature that adjusts future budgets accordingly when you get paid.
And Acorns will round up every purchase to the nearest dollar and invest any spare change in an index fund portfolio–you can also invest manually yourself.