Money management is the process of managing money, including budgeting, saving, investing, taxes, banking, spending or otherwise in overseeing the cash usage of an individual or group. Good money management is making good choices. Good money management is having control over your finances utilizing a budget and analyzing your expenses. Are you a good money manager?
Budgeting – A budget is a tool or structure that helps you manage your money. The process of budgeting helps you take control of your expenses because you have to think about how you spend your money. Most people avoid budgets because they think it force them to restrict their lifestyle. It is actually just the opposite! It just makes make choices where you spend your money. It usually starts with making a list of your spending and you make sure that you have enough to cover our expenses.
Saving – Saving is a question of your personal goals and priorities. Saving on a regular basis requires discipline! I have a payroll deduction for savings and it makes it automatic. How much you save may reflect your personal financial condition or your willingness to save. If you have financial goals, you need to save for them. Saving ten (10%) to fifteen (15%) percent of your earnings is necessary to achieve most financial goals. You can start with smaller amounts and add to it.
Investing – Investing in the stock market can be intimidating, but it does not have to be. There are many investment vehicles in the stock market that can lower the risk for individuals. Most people do not invest in the stock market because they are afraid they may lose their investment. You should invest in things you know something about such as companies you are familiar with. You can invest in real estate where you can have much more control of variables. Most importantly, you can have it professionally managed.
Taxes – “In this world nothing can be said to be certain, except death and taxes.” (Benjamin Franklin) Yes, both are certain, but you can do something about them. You can live a longer and better life if you exercise and maintain a healthy diet. You have to pay taxes, but you can do something about how much you pay. No matter how much you earn, you have control how much withholding the government keeps until you file your tax return. Every year, I estimate my earnings (taxable) and adjust my withholding accordingly.
Banking – Many people chose their neighborhood bank because it is convenient. Of course convenience is important, but you should consider cost and services too. It is one of the reasons, online banks are increasing their presence. Banks for me, are a financial resource. I use them for a borrowing relationship as well as a depository. I use all the usual consumer services such as a checking account, ATM and other services. I use my relationship to pay no fees.
Spending – Spending money is not difficult! I spend my money very carefully to maximize the results. I shop almost everything I can. I analyze my expenses every month to find ways to lower them. I use credit cards to earn miles, points, cash rebates and rewards. I still pay the entire balance every month and never incur a finance fee. How you spend your money is personal, but if you want to have control of your money you need to think about your spending.
Money management should not be a foreign concept! If you want o achieve your financial goals, you must have some control of your expenses. I learned how to budget when I had my first job and needed to save for college. My skills in money management were honed by living on a very meager budget in college. For example, I had to do laundry every week and buy Sunday night dinner. Money management taught me how to make good choices and control my spending.
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