You guys remember when checkbooks used to come with the black carbon paper that copies what you wrote? The idea was that you’d record your transactions when you paid with a check. Checks are a thing of the past and most people only use them in special situations. In the past, this was the equivalent on how to manage your finances like a pro and you had to be good at doing this all the time.

Nowadays, most transactions are done with a credit or debit card. In addition, with the advent of the internet and e-commerce, you don’t even have to leave home to buy things.

So, spending money is quite easy, but what about managing it? To manage your finances like a pro, what you need is a central “headquarters” to see where all your money is actually going. Now that technology has evolved, we can track that much easier.

Who needs to manage their finances?

The short answer – all of us! We should all be aware of what’s going in and out of our wallet at all times. It might sound like a chore, but it should be a top priority. Up there with relationships and eating! The truth is most people don’t prioritize managing their money. Which is why the proverbial poor stay poor! 

I understand you might not want to have an extra task to add to your to-do list, but making sure your money is in order could help you avoid countless headaches. You might not manage your finances like a pro when you start off, but the idea here is to start somewhere. 

How do I start managing my finances like a pro?

A good cadence to start off with is at least once a month. This will look different for everyone, but the basic idea is to have a list of everything coming in and out of your accounts. Sit down at your dining room table, get a few sheets of paper, and start making a list of everything that relates to money, which is pretty much everything. Or, if you’re like me, get on your laptop and open a spreadsheet. This step is necessary, so you get a baseline of how your money is moving.

What should my list look like?

To manage your finances like a pro, it does take some more effort on the front end, but you’ll be glad you started. Below is what you should include in your list. I’ll have a template you can download shortly. 

1. Income – how much are you making per month?
2. Rent/mortgage – what’s your monthly payment?
3. Transportation (include car payments, insurance, parking, car maintenance, public transportation, etc.) what’s your monthly payment on each.
4. Utilities (electric, gas, water, sewer, trash pick-up, etc.) – what’s your monthly payment on each?
5. Other monthly expenses (cable, cell phone, internet, streaming services, and all other monthly subscriptions you might have – what’s your monthly payment on those?
6. Groceries – how much do you typically spend each month?
7. Takeout and restaurants – how much do you typically spend each month?
8. Entertainment (movies, concerts, bars, clubs, etc.) – how much do you typically spend each month?
9. Health (doctor visits, dentists, eye doctor, fitness membership, etc) – how much do you typically spend each month?
10. Miscellaneous (Personal hygiene products, clothing, jewelry, home goods, etc.) – how much do you typically spend each month?
11. Credit cards & any other loans – what’s your monthly payment on each?

I made a list. Now what?

Congratulations! You’ve taken the first step towards taking control of your finances. This is something to absolutely be proud of. Not only are you starting to manage your finances like a pro, but if you’re consistent with this, you’re starting a lifestyle that will lead you to financial freedom, and ultimately, financial independence. Most Americans don’t have the slightest clue how to handle money, but you don’t have to be part of that crowd. This is how you stop living paycheck to paycheck and start living life on your terms. Kudos to you fellow Frugalchu! Check out my recent blog on how to Stop Living Paycheck to Paycheck.

Redirecting the flow of money

Now that you know how your money is moving, you can see the flow from a bird’s eye view. If too much is flowing one way, redirect it somewhere else that aligns with your goals. Keep in mind that you don’t have to do it all at once; start small. Look at it like multiple faucets running in your house – you don’t need all your faucets on at once, just the one that you’re using. When you’re able to see exactly where your money is going and when it’s going there, you have control. To manage your finances like a pro, you need to be consistent in directing, and redirecting your money when needed. 

Repeating and automating the process

You’ve now figured out what areas you have to look at to gain control of your finances. Take a look at the list above as many times as you need to remember what areas your money might be moving to. Now, one of the best things about modern day technology is that you don’t have to work too hard to repeat this process. If you have a smartphone, you already have the best tool to manage your finances like a pro! There are a lot of apps out there that will do all of the work for you. I personally use the two I have listed below. You can search the web for financial apps like these, but in my opinion, these two are the best because they’re user friendly, and free to use.

Mint

Mint, from Intuit, has a ton of tools that help you track your personal finances. It has been around almost two decades, and just like other Intuit tools (TurboTax & QuickBooks) it’s super reliable. It’s free to use, lets you add all of your financial accounts, and very user-friendly. You can get it both on your smart device (iOS or Android) or your desktop. 

Interested? Use this link: mint.untuit.com

Empower (Personal Capital)

Empower (formally known as Personal Capital) like Mint, is great for keeping track of your finances, and monitoring your cash flow. However, for investors, this might be a more dynamic tool. You can take a glance at your holdings and compare to the broader market to get a sense of how well you’re investing. It is free to use, though there are some fees involved if you want to dig deeper for financial advice. However, if you don’t want to pay for any advice, you can just use it as a tool to track your spending habits and investments.

Interested? Use this link: empower.com

Now you’re a Pro!

I hope the tips here created an “aha” moment for you. Becoming the manager of your finances doesn’t have to be a chore. We’re living in an age of information, technology, and now, artificial intelligence – meaning that it is now easier than ever to do things that use to be a chore. Once you see your net worth start to rise, you’ll be glad you started! If it helps, start small, and just stay consistent. When you get to the point where you can manage your finances like a pro, find a way to learn more, and become an even better pro! The important piece is that you start somewhere. Good luck fellow Frugalchu!

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