Five Golden Rules of Daily Money Management

Is there a way to get a handle on how much money we spend and how much money we earn every month? The answer is, yes!

Below is a list of 5 golden rules of daily money management. These are the rules some of us wished we were taught in school because of how stressful it can be when we let debt accumulate or live paycheck to paycheck with no change in sight.

The five golden rules of daily money management:

Rule #1. Pay yourself first! The best way to do this is to designate a certain amount of money to be deducted from each paycheck. If you don't see the money in your checking account hopefully it will be out of reach and you will be less inclined to spend it.

Rule # 2. Create a spending plan and stick to it! When you don't plan you will always be taking a rearview mirror approach to managing your finances. There is little you can do to recover money once it has been spent.

Rule #3. Maintain a checkbook balance! Periodically compare your balance to what the bank says you have. Your checkbook balance is your true bottom-line because you will have deducted all outstanding payments and checks.

Rule #4. Maintain a cash register! This looks like a checkbook register but instead you are adding and deducting all your cash transactions. It is easy to stop by the ATM for cash. In a day or two you find your wallet empty again and are back at the ATM for more cash. Chances are you have little recollection of where the money was spent. Small purchases add up whether you spend the money on food or other discretionary items - multiples of $50's or $100's several times a week over the year add up to a significant sum of money.

Rule #5. Avoid using "plastic"! Although a card (debit or credit) swipe is convenient, it is habit forming. There is little if any consciousness or connection with a transaction. Have you ever grabbed a receipt from a debit or credit card transaction, unconsciously stuck it somewhere never to be looked at again? Sometimes we are in such a rush we will sign a credit card receipt and not even look at the total.

Even when you pay off your credit card every month it has been proven you will spend 15% to 30% more. If you pay with cash you can only spend the money you have with you. Reward credit cards are enticing, but if you spend less when you use cash you will save money in the long run which is probably worth more than the value of the reward offered by the credit card company.

The bottom-line is to avoid spending more that you earn. As you know, this may sound simple but is not always easy; however, if you follow the five golden rules of daily money management overcoming your personal financial challenges may become easier than you think. The purpose of these five rules is you help you stay in touch with reality. When you know what is 'real' this is when you become empowered to make stronger financial decisions.

The closer you come to implementing all 5 of these rules the greater your chances of financial stability and success. However, don't give up if you cannot get on board with all five. Changing from old habits to new ones is a process. Start with one rule or one step at a time. When you start to notice results you will be motivated to apply all five rules.