Everyone must learn how to manage finances. Financial freedom is not always about how fat your salary is; it is more about how you can manage whatever you earn. An individual earning a large amount every month may still be in debt at the end of each month, while someone earning something smaller may live in complete financial freedom and not be in debt.  It all boils down to proper financial management.

It will surprise you that large portion of Americans is guilty of this. In fact, a finding shows that Americans are the worst in money management compared to people from other developed countries.

In this write-up, you will be enlightened on how you can properly manage your finances so that you will not be in debt ever again. You will be given some time-tested methods for proper money management.  These methods will be your light at the end of the debt-filled tunnel if you can follow them as prescribed.

Create a budget

The first step towards proper financial management is budget creation.  Asking if a budget is necessary is like asking if a windshield wiper is needed by a car in motion on a rainy day. Everyone needs a budget to ensure proper money management.  You should also make sure that you stick to the budget as much as possible.

A budget will help you to see your real financial situation with full transparency and clarity.  It ensures better management of your income. If you desire to be debt-free, a budget is the first thing you should develop.  A proper budget can help you to pay off your debt, and save enough money for your retirement, car, and mortgage.  A properly made budget will give you peace of mind since it will bring some balance to your financial life.

First of all, you must understand your various expanse and incomes for better financial management.  We will look into this in the next item to be discussed.

Understand your expenses

It is unfortunate that many people cannot even say off hand how much they spend every month; this is bad indeed.  If you are one of those in this situation, you will be given a simple solution here.

Make a list of all your expenses for the past months. Gather all the receipts for your utilities, restaurant bills, groceries and so on for a particular month, preferably the immediate past month. Consider your bank statements also and add up all the expenses.  Never forget about those expenses you paid by cash also and those you paid for via credit cards.  This way, you can successfully add all your fixed and variable expenses for a given month.

The total you have obtained will give you a clear picture of how much you have spent for that month.  You can repeat this for two or more months and check how much the monthly expenses vary.  With this information, you can see where you need to cut down your expense so that you can reduce spending and save more.

Understand your income.

Most people do not know how much they earn per month. They may guess, but rarely can have a specific figure; this is because many  and spend without thinking, which is bad for finances. However, those that have just one source of income can tell you off hand how much they earn.

After calculating your total expenses as described above, subtract what you get from your total income for that particular month.

If you obtain a negative result, it means that you are spending more than your income. The best way to be free from financial bondage or debt is to make more money than you are spending.  It is time to reduce your expense and spending until the income is more than the expenses.

If your result is positive, on the other hand, it means you are in a good financial state. In this instance, you should increase your savings or increase your debt payments.

It does not end there. Continue reading to find out what further actions to take towards becoming financially free via proper money management.

Consolidate your debt

Everyone hates debt, but it is unfortunate that many of those who hate it still find themselves getting into debt. It is unfortunate that many of these individuals cannot get out of debt without professional help.  The information provided here can help you to get out of debt.

Do you have a student loan, card debts or other forms of debt?  You should see how you can get the lowest possible interest rates for these loans; this is possible if you consolidate your debts.  You can benefit from options that permit combining payday loans, personal loans, credit card loans and other unsecured debts into one bill and pay for them together instead of paying them back individually.

Do you have a single credit card debt and your budget is tight?  Make sure you pay at least the minimum amount immediately you receive the credit card bill. If you come by some money aside from your regular income, you can spend part of it to pay off some more of the credit card debt.  Your debt will soon be paid off completely if you can maintain this payment cycle.

Get rid of any unnecessary expenses

One other way to cut expense and save more money is to remove or reduce how much you spend on certain unimportant things.  It is time to differentiate between your wants and your needs. Your needs are those essential things, while your wants are those things you can do without. Venti Caffe Latte is delicious, but buying it every day can cost you a lot of money; it will cost you about $4 per day. Adding that amount together for a year will amount to about $1400. Instead of spending on it, why not make it at home at little or no cost?


You will soon be debt-free if you can follow the information provided above. Do not fret if the results do not come fast; they will come with time and gradually if you stick to the plans given above. Proper management of your finances can help you to live in peace of mind and may also elongate your lifespan.