Managing Money is No Easy Task

In this recession some people will learn the hard way that managing money correctly is not something that can be postponed until your kids are teenagers. Managing what you earn is no easy task and you should set aside some time to do it a couple of days each time you get payed, that means that Thursday before your salary is deposited into your account you have to sit down and write down what is it exactly that you are going to do with your money.

Experts recommend a lot of things, and many smart people have written books on how to create a budget and what are the best practices to save money and spend your hard earned money wisely. So before the budget is casted in stone, inform yourself of what people who know what they are doing recommend for your case.

Actually there are gazillions of "money wizards" out there that tell you a lot of different things, but most of them agree on basic principals. Saving ten per cent of everything you earn is one of those advices that you will hear everywhere you look for financial advice. That may seem a bit drastic to you, specially if you are living check to check, but in reality it will help you think twice before buying anything, and so become much more responsible on the way you decide to spend your money, with the added benefit that when there is no income the person will have something to fall back on.

Try to avoid any type of credit. If you purchase everything with cash you won't buy things you can not afford. Credit is a good thing if it is used only when the sky falls down, not to buy thatPlayStation, or to pimp out your ride. This is a common mistake a lot of people who just started earning money and has no real responsibilities. When they actually try to manage their money better it is more difficult because of the repayment of the borrowed amount. Stick to the basics, if you want a new fridge save until you have for a new one, or buy what you can afford, this will help to have less expenses when the income grows and the ability to purchase better things is actuallyattainable without more credit.

Never, and I mean never, use the money from the ten per cent you are saving for yourself to buy that refrigerator we where talking about. Instead do it as if you had already purchased the fridge with your credit card, pay a monthly fee to that account. That way you are true to the concept of saving money which is meant for retirement or for an emergency, and not just saving up to buy stuff.

After you have saved up and have had the good insight of keeping track on how is it that the paycheck is spent, and saved up quite a bit of money, the tricky part starts. Keeping the money in your checking account or savings account will not get you anywhere, it will actually make you loose money, that is because of inflation and the bank fees. Learning what to invest your hard earned savings will require some knowledge, but it is really recommended that you instead get an advice from a trusted professional and put that money to work, by investing in something, but that is the subject of a different article.

Seed Newsvine

Bookmark this article in your preferred program

Comments

Add Comment

Popular Articles in this cathegory

This article is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.