How to Manage Your Money Without Waste

The risk is always the same: biting off more than you can chew, and not having full control over your expenses, which are regularly covered by reliable income. Managing your money (income and savings) effectively involves two aspects that must be considered side by side: the one related to household and personal expenses, and the one related to savings and investments. How do you reconcile the two sides of the same coin, with the right choices and without wasting money? How do you avoid waste that ruins your finances and poisons your life?

Index of topics

Financial goals

The starting point is to have a complete and organized overview of your finances. This includes:

Knowing your ordinary expenses, of any nature, and always try to stay within the set budget.
Forecast extraordinary expenses in advance, and if necessary, spread them over a period of time that is not too short and therefore difficult to amortize.
Try to have a reserve, in terms of financial availability, both for unforeseen situations and to avoid giving up the economic security guaranteed by the presence of savings.

Obviously, before these easy measures, there is the mountain to climb: avoiding unnecessary expenses.

The household and personal budget

Each of us knows the ordinary expenses we face month after month, both on a personal level and for household management.

An ancient rule, which can be used to avoid wasting finances and spread them carefully, at least as a rough guide, is the 50-30-20 rule. Given a certain and available income of 100, the following percentage breakdown of expenses is expected:

50 percent for essential expenses (housing, bills, food, clothing, transportation)
30 percent for extras and free time
20 percent for savings and investments

Simple and good habits

Sometimes financial waste arises from bad habits, rather than specific mistakes.

In this regard it is important:

Avoid shopping (and impulsive and compulsive hoarding. Even food shopping should be done wisely (for example, always accompanied by a written list of items to buy), precisely to avoid falling into the trap of unnecessary or impulsive purchases.
Don't compare yourself to other people's lifestyles. It's never a good idea to base your decisions on other people's living standards, along with their associated financial costs: they may have very different means than yours.
Don't lose sight of Modesty, light-heartedness, and reasonableness. They can make all the difference and ensure careful, waste-free management of your finances. Go shopping in a correct way, and without depriving oneself of anything that is useful, falls within this objective.

Sustainable debt

Whatever debt you incur, you need to be sure you can cover it with your income. Even if it's deferred and paid in installments. If you're able to pay off debts early, you can do so by following one of these methods. these two methods:

Snowball method: extinguish the smallest ones first (a behavior that is easier to manage on a psychological level).
Avalanche method: pay off debts with higher interest first (statistically this is definitely better).

Credits collectable

For credits, the same applies as for debts: you need to be sure they're due when they fall due. Otherwise, you risk making a deal without your host.

Periodic checks

Periodically, and without obsession, it may be appropriate to monitor the trend of ordinary expenses and evaluate the impact of extraordinary ones. Common sense teaches that small adjustments avoid big problems.

Investments and savings

If you can spare the 20 percent of your overall budget earmarked for investments and savings, rely on professionals and avoid the DIY approach, which can waste your money on poor, poorly executed decisions.

How to manage your money without waste