Money management is the process of knowing where you are spending your money today, and having a well thought-out plan in place for where you want it to go in the future. This article will cover the core concepts of money management, and will teach you how to:
* Set Goals
* Get Organized
* Cut Spending Waste
* Build a Budget
* Save Money
1. Set Goals
Setting financial goals is exciting – it is your opportunity to decide what you truly want to do with your money, and to achieve those goals without having to borrow for them.
* Set specific goals
Financial goals are specific rather than vague. Before you start to save, determine exactly what you want, when you want it, and how much it will cost.
There are three basic goal types: short-term (achievable in under a year), mid-term (achievable in two to five years), and long-term (achievable in five-plus years). If you have multiple goals, you may choose to work toward them all at once, or concentrate on one and then move to the next. Calculate the amount you need to save:
2. Get Organized
Organization is key to efficient money management. Once all of your information and paperwork is in order and accessible, you’ll never have to waste time searching for important documents, wonder about account balances, or miss bill payment deadlines.
* Designate a personal money space
Set up a safe and private area in your home where you can conduct all of your personal financial business. This is where you will be keeping such documents as incoming bills, shopping receipts, and tax records. If you have a computer, a logical workspace will be close by, particularly if you will be using software designed to help you with money management.
* Streamline(精简，使更有效率) your personal finances
The more incoming paperwork you have, the harder it is to keep straight. Therefore, a great way to simplify your system is to sign up for online, automatic bill pay (available for free at most financial institutions). With it you’ll be able to view statements and pay bills via the Internet. It cuts down on mailed bills that can get lost under a shuffle of paperwork, and can prevent late payments, help you avoid penalty(罚款) fees, and keep your credit history positive.
* Monitor your checking account
If you have a checking account(支票帐户), monitor your account activity carefully. You should always know your correct account balance, if checks are outstanding, and when any automatic payments are due to be withdrawn. This way you will never overdraw your account and be charged insufficient funds fees.
In your checkbook register, list every transaction(交易) you make, including deposits, checks, ATM withdrawals, and debit card purchases. Regularly compare the information you have recorded in your checkbook register with the information on your account statement. Reconcile(使符合, 使一致) any differences immediately and contact your financial institution if you notice errors.
3. Cut Spending Waste
“Waste” is spending money on things you don’t really care about or need, simply because you are not paying attention to your shopping habits. You can increase your spending and savings power by identifying where waste lives in your budget and taking steps to eliminate(排除, 消除) it.
* Track spending
Track your spending for at least one month. This is a very important and revealing(给人以启发的) exercise. Only after you know where your money has been going can you begin to redirect it to where you truly want it to go.
4. Build a Budget
Do not be intimidated(胆怯的) or put off by the word “budget.” It is nothing more than a plan for what you want to do with your money. A well-designed budget is not restrictive, allows you to make the most of every penny you earn and will keep you on track with goal achievement. Though everybody’s budget is different, there is one consistent(一致的) rule: expenses should never exceed(超过) income.
* List and total your monthly net income
Begin with income, as it will determine what you can afford to spend and save each month. Total up every net (already taxed) dollar you make in a month. Avoid overestimating(过高估计) your income. It’s better to have money left over than be caught not being able to pay your bills.
* List and total your current monthly expenses
You will see that there are two columns in the budget worksheet – current and proposed. In the current column, list your monthly expenses as they are now. Use the figures from your tracking forms to help you with accuracy. Do not forget those expenses that come up once in a while (called periodic(周期的, 定期的) expenses), such as gifts, weekend trips, or vehicle maintenance costs. Using conservative(保守的) estimates, total what you think you spend on them in a year, then divide the number by 12.
5. Save Money
Setting aside cash on a regular basis is a habit worth getting into. While saving money may at first seem difficult or even impossible, in most cases all it takes is a commitment to the process and adopting an efficient savings system.
* How much should you save?
An excellent goal is to save ten percent of your monthly net income. Therefore if you make $1,500, ideally you would put $150 into a savings account. Of course, not everyone can set aside that percentage, so if money is tight, begin with whatever you can afford, even if it’s only a few dollars.
* Establish an emergency fund
An emergency fund is an important part of every savings plan. Having three to six months worth of essential living expenses set aside will guard your finances against unexpected job loss, medical problems, and high expenses.