The short answer is,
I don’t.
At least I didn’t until a couple of months back.
“Money doesn’t buy Happiness, but Money buys choices. It’s what you do with those choices that makes you Happy”.
Some guy on Reddit
I grew up in a lower-middle-class family in Ethiopia. My parents were from the rural parts of Ethiopia and made their way to Addis through Education. They didn’t really teach me much about money and I never heard my dad or my mom talking about money even though they struggled a bit when I was young. My mom was frugal and she kept watch of every cent that went in and out of the household and I hated that. So I never asked my mom for money unless it was extremely necessary I always went to my dad. I understand now that my mom had to become that person to maintain the family finances.
The only lesson I remember getting from my dad about money was when he created accounts and saved money for me and my brother every time we got good grades, I didn’t really see the point of it at a young age because I wanted the instant gratification, but now looking back it was one of the biggest things my dad tried to teach us. It was his way of showing us the value of money. Plus, thanks to my dad I still have that money saved up to this day. (Even though Inflation has turned it into peanuts)
Because I hated my mom’s frugality, I wanted to be the opposite and I adopted the philosophy of “I should spend my money on things that give me satisfaction at that moment and the future will worry about itself”. Which when I started a full-time job led me into a path of spending everything I make, even most times borrowing money from friends and family to make it to the end of the month.
Moving Out
Then I moved out of my parents’ house last year and everything changed, I had to think about money and managing the ways I spend it because I had rent and other bills to pay. I had not really worried about money before this point, all the money I made I spent with careless abandon, and to be honest, it was fun because at the end of the day I came back to a home-cooked meal and a bed I did not have to pay for.
After I had decided (was forced) to adopt a more responsible living with my finances I stumbled onto this guy named matt d’avella on YouTube talking about Simple Steps to Financial Freedom, That was when I started monitoring and managing my money.
The first thing I did was follow his advice and kept track of all my expenses meticulously for a couple of months using an excel sheet. I had to know how I was spending my money.
Then based on the monthly expenses I tracked I set a limit to how much money I should be spending every month on specific items and categories.
This system helped me solve the mystery of where all my money was going and plan my financial future. Although I have not become a financial expert and I don’t always keep to the limits I set for myself every month, it has gotten me out of the debts I was in and into a lifestyle of not worrying about my future as much as I used to.