Penny Pincher: Time to Manage Our Money

If you haven't already, Gen Z (and Millennials), it's time you started learning how to manage your money.

As you know, I don't have a hefty financial portfolio to stand on. I'm in the same position that most of you are: a young adult still relying on my parents as a safety net when I thought I'd have my life together by now.

Personally, I romanticized the idea of having my life "together." I imagined at least three streams of income and a multitude of assets. Yet, I'm still at square one, wondering what I will do when I graduate. The thought of being stuck in a job that I hate for money frightens me, so I have to start on those income streams and assets ASAP.

But guys, I can barely keep the money I make in my account; what will I do with more? Wait. How am I going to get any more without money to actually invest?!

I've already told you about my spending habits, and if you are unaware, just know that I cannot keep money in my pocket, and people have reached out to me and said that they also struggle with this. Poor money management is a virus that gets worse with our income. I would hate to see anyone working hard to increase their tax bracket and have nothing to show for it.

What is Money Management?

My favorite definition for money management didn't come from Nerd Wallet or Forbes; it actually came from Wikipedia.

Money management is the "strategic technique to make money yield the highest [return].

Basically, it's getting your portfolio to a point where your money can finally work for you. The categories are expense tracking, budgeting, investments, banking, and taxes.

We're going to focus on the second one: Budgeting ( a.k.a. One of the most unattractive practices surrounding money).

However, budgeting is the necessary evil that separates those that will be financially self-sufficient and those that will be stuck living paycheck to paycheck. I don't discount factors that may impact your ability to save money. Everyone has different responsibilities to their families and themselves that may affect their money management.

Despite these responsibilities, you can still create and set a budget. It just may result in having less to put in categories for personal wants and goals.

You may be slower at reaching your ideal numbers, but slow and steady wins the race.

How do I start?

Finance influencers make money management look easy. Most have years worth of experience under their belt. How do over-spenders like us even start?

I did a deep YouTube dive and learned that setting up rules for your budget is easy. Sticking to it is the hard part.

So here's what you do:

1. Write down your expenses, bills, savings, emergency fund, and financial goals as categories.

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2. Determine which categories are bills and how much it will cost to pay them. Bills are defined as money you owe to have products and services paid for at a later date and are usually reoccurring.

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3. Establish mandatory expenses that you find yourself paying for every month. Expenses are defined as money you spend on products or services at the point of purchase and may or may not reoccur. (Hint: mandatory expenses reoccur.)

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4. You now must determine what to add to your savings and emergency fund. These are two different types of accounts.

4a. Emergency Fund: Designed to cover your bills and mandatory expenses for at least three months and is in a checking account for easy access. ‍

4b. Savings: Money saved to reach a goal, such as purchasing a home or car.

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5. Decide any other expenses you want to add to your categories. These are things that are not mandatory and should receive smaller amounts of your paycheck.

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6. Decide where to allocate the funds that you don't spend. Do they go to another category that you're saving for? Do they roll over and accumulate?

7. DON'T SPEND MORE THAN WHAT IS AVAILABLE IN EACH CATEGORY AT ANY GIVEN TIME. Sorry for all caps, but I have to get the gravity of what I am saying across. Overspending is how we got ourselves in this position, and this system is an opportunity to get us out of that bad habit.

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When you figure out your categories and put values to set aside for each of them, you should come up with something like this:

You can stick to your budget by keeping a tracker like this one. You can also send me a DM on socials, send an email, or leave a comment.

I'm getting back on social media soon, and I'd love to hear from everyone!

Conclusion

The act of managing money can be daunting when we think about how we're going to tackle it. The simplest way to start doing so is to create a budget.

Overall, budgeting gives every dollar you earn a job. Your expenses are categorized, and a predetermined amount of your money is put into each category. It's up to you to respect their amounts.

So are you good with finances? Are you not? Let the #goalgetters community know how you struggle or triumph over your budgets in the comments!

Signed,

Penny Pincher: Time to Manage Our Money

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Penny Pincher: Time to Manage Our Money

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