4 Tips For You to Better Manage and Understand Money

There’s an old saying;- “take care of the pennies, and pounds will take care of themselves.” It’s 2015, but the saying above still holds importance. You may be good at investing but suck at saving. You are not alone as there are many like you, who earn a lot but fails to save.

In this article, I will help you with some quick tips to save money. No, you don’t have to be an economist, you just need to have some common sense, that’s all! The tips are simple to comprehend and simpler to implement.

understand money

Understand the psychology

Saving becomes easy when you get a hang of the psychology behind money. The psychology begins and ends with one word; control. The more control you have over money, the easier money management would become. It’s the control that influences your beliefs, expectations and opinions.

An example can articulate this better; you go to the nearest bank whenever you need money. You do have control over your money, but not enough control. A debit card allows you to shop from domestic retailers, implying more control. A credit card, on the other hand, lets you purchase from an overseas country – even more control.

Not being able to override the bank makes you feel disappointed. But having a credit card brings happiness to your life. So, your secondary emotions revolve around the primary emotion, which is having control over money.

Be consistent

Don’t play Jekyll and Hyde as it totally goes against the key principles of saving. Dr. Jekyll is the spender and Mr. Hyde is the saver. If you are playing Dr. Jekyll, then follow a particular set of tips. Such tips include pay-on-the-go, withdrawing cash and keeping a track of the plummeting account balance, using cash instead of debit/credit card, etc.

If you are Mr. Hyde, or more into saving, consider your future as your priority as that can give you directions. There’s a big difference between saving for trivial purposes and saving for an actual reason. You can save for a vacation or you can save for the future of your children.

Sharp judgment

Money often clouds a person’s judgment. Watch out for it as it may lead to severely undesirable consequences. Clouded judgment is same as no judgment. Don’t want to have your judgment clouded? Then never let money take over.

In the beginning, I said control is essential if you want to earn money and manage it. Unless you have sharp judgment, you can never enjoy control and never laugh the last laugh. Harvard University and the University of Utah jointly conducted a survey, which revealed something very interesting:

Two groups of students were given two different tasks; one group was asked to write neutral sentences such as “He plays basketball,” and the other group was given the task of writing sentences with financial undertone such as “He broke his fund.” Afterwards, it was found that students from the second group are telling more lies than students from the first group. Money also makes people gluttonous, promiscuous and immoral. Such people quickly fall for anything, especially if it’s tempting.

This way, people lose control over money, and money takes control of them.

Tax scams

You need to keep your eyes open for things that glitter but not gold. Tax schemes are such things; they appear so attractive, they also lure you to buy them. But in reality, many of them are phishing schemes, from which you need to protect yourself. Scammers have started to use cutting-edge technologies to fake identity.

You might receive a call from someone, who claims he’s an IRS agent collecting on a tax bill. The caller might ask you to reveal your identity or to hand them money. They might threaten you telling you haven’t returned your tax, and you may have to serve jail time for it. People often give money out of fear, which encourages the scammers.

Remedial steps that you can follow are filing your tax returns as soon as you could and finding a tax preparer, whom you can rely on. Remember, your tax situations won’t change overnight unless you get married or your annual earning gets doubled. The scammers might attempt to intimidate you, don’t fall for it.

They are all linked

That’s right! Don’t consider any of these tips in isolation. For example, having sharp judgment helps you identify a scammer quickly. So, the more you link one tip to the other, the better becomes your understanding of money, and the wiser you spend.

What do you think of the four tips discussed above. Do you agree with them? Or do you disagree? Do you have any tips of yours that you’d like to share? Tell us in the comments.

Summary:

To manage money, you first need to understand it. To be successful with money, you need to be patient, have a sharp judgment, understand the psychology behind money, and avoid scammers. Once you take all these tips in consideration, money management becomes easy for you.

About Tina Roth

Get to Know Me Better. Hi, I'm TINA! I am a financial planner, blogger, and freelance writer and digital marketing consultant. The idea of starting a finance blog has been hitting me for long; I took it seriously after falling into a spiral of finance debacles and recovering from it. Here I write about personal finance and money management tips.

4 comments

  1. Good tips! For me, I’ve found the psychology behind our actions with money are fascinating and extremely helpful. If we dont understand our inherent irrationalities, we have no chance to properly manage money. I’ve found behavioral economics has really helped bridge the gap between what we should do and what we actually do. We do some crazy things over and over again. 🙂

  2. “You may be good at investing but suck at saving,” many people I know are guilty on this. New Year is about starting a new beginning and mostly people’s New Year resolution is to get out of debt. Very refreshing article to start the year. Thank you for sharing your good tips on how to understand and manage money.

  3. Excellent blog post. Well researched and great tips on better manage and understand money.

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