Money cannot buy happiness: this is a notion that many people are yet to agree with. And while this is true, money can in some way bring a sense of security.

Without the right understanding of money management, you may always feel like you are one step away from a financial cliff. You should understand that being good with money goes beyond just making ends meet.

This doesn’t mean you should be some Albert Einstein math genius. In money management, you only need to understand basic subtraction and addition coupled with a few skills. Your life can become much easier if you have adequate financial skills. If you’re having issues with money management or want to learn how to do so, read these tips to set yourself on the right financial path.

Have a Budget

Before anything else, create a budget if you’re yet to. You might be wondering whether this is necessary. It is; just like how windshield wipers are necessary for the rain, creating a budget serves the same purpose. You should understand that the journey to personal finance isn’t comfortable, and it’s in your best interest to have a plan.

While sticking to a budget might seem challenging at first, it eventually pays off in the end. Budgeting helps you see with full transparency your financial situation, which is vital for better managing your money. Additionally, this is the first step towards debt repayment and could also help you start saving for future expenses such as a car, retirement, or mortgage.

Track Your Spending

Ideally, many of us are accustomed to small and random purchases here and there in our daily lives. What you don’t realize is that these small purchases could quickly make you overspend on your budget. We recommend that you start tracking your spending to establish places where you may be unknowingly overspending. A good movie is to start by saving your receipts and recording your purchases in an entry diary. You can categorize your spending to help you identify areas where you have a challenging time keeping your spending in check.

Choose an Ideal Rent or Mortgage Plan

For many of us, housing costs take up a massive chunk of our budgets and a significant emotional investment. The search for the “ideal” home can easily stretch your budget beyond what you can afford. When planning your housing budget, ensure you include all fixed costs and plan for the amount you want to pay. Just because a lender has approved you for a specific home loan doesn’t mean it’s your ideal budget. You should know the lender is looking out for their best interests and not yours. If you’re realistic with what you want from the beginning, this can save you a lot of financial stress.

Pay your Debts

If you have plenty of unpaid debts, this can get in the way of meeting your financial goals. Ideally, most debt accrues interest with time. This means that becoming debt-free can take a long time to clear, especially if you’re only making minimum payments. While you may be tempted to think about debt consolidation, this only works if you commit to living within your means. The downside is that you could end up with a debt consolidation loan coupled with a new credit card balance. If you’re getting a loan, we recommend choosing one with the shortest term possible.

Save for Huge Purchases

Your ability to delay instant gratification will go a long way in improving your money management habits. Start by putting off big purchases that you cannot afford at the moment. You should avoid sacrificing more critical essentials or putting that purchase on a credit card. Give yourself some time and assess whether the purchase is necessary and even more time to compare prices from different vendors. If you save up instead of using credit, you will have avoided paying interest on the purchase.

Pay Attention to Your Income

If you ask any random person how much they make in a month, high chances are they won’t tell you. However, deep down, they know. This is the contrast between expenses and income. While many people know their full monthly expenses, they have less knowledge of their monthly expenses. Either way, the key is to figure out your total monthly expenses and subtract them from your total income for the month. Once you understand these figures, it’s time to take extra steps to manage your money.

You should also remember to save some cash for a rainy day plus your retirement. While this seems far off, the earlier you start saving for retirement, the better off you’ll be in your senior years. Managing money efficiently will make life much smoother for you, not to mention lowering your stress levels. So, get out there and use these six steps to manage your finances better.