Money Management Important Tips
Powerful Tips for Money Management
When young adults begin to work and receive their first paycheck, they get a taste of a sense of real freedom & don’t usually think about money management. This feeling is usually not combined with the little voice that says, Save your money. They suddenly find that they are sharing their wealth and are buying things they could not afford in the past. Celebration is not bad, but it is only meant for rare occasions. Freedom comes with responsibilities.
If real money management is not practiced early, there is a real chance that spending will often be more gluttonous than necessity.
Financial Finesse printed an article titled, “2013 Financial Stress Research”. In this article some startling statistics were brought to light. In the age category of 30 years and younger, 62% admitted to feeling financial stress while an additional 15% admitted to feeling overwhelmed by their financial situation.
[bctt tweet=”Here are some important tips for good money management…” username=”HBSMoneyTips”]
Here are a few powerful tips for money management:
Create a budget. A budget will let you know what you can afford and how to best spend your money.
Financing a Mercedes may not be the smartest spending habit when you are just beginning to live your life. Sure, you may be able to afford it but that doesn’t mean you should do it. Use common sense in money management.
Look at all the little ways you are spending your money. Cut out the daily designer coffees and vending machine visits. While the amounts seem very little, added up, you could be spending more than a $1,000 in something as simple and not needed as designer coffee. Eating out for lunch every day has an equally surprising impact at the end of the month. You could easily spend $2,500 a month for a daily $10 lunch.
Check with your employer about the company 401k plan. Many employers offer matching contributions and this is essentially free money. Take advantage of this. Set aside as much money as you can now so your retirement money can grow and grow.
The recommendation for retirement savings is 10% of your paycheck. Add more if you can. Your employer will automatically deduct this amount from your paycheck so you will never see it.
Auto deduct everything. Your bank can automatically deduct certain amounts to go into various savings. Monthly bills can also be automated. Having money auto-deducted avoids the spontaneous impulse to spend money you shouldn’t.
Create your emergency savings. People are generally able to survive until emergency strikes, and then they often feel like they are constantly drowning and having a hard time keeping their head above the debt.
Emergencies come in various forms from health, to auto or home repairs, to job loss. Diverting as much money as you can to your emergency savings will give you peace of mind, especially when emergencies strike.
Your emergency savings should always have at least 3-6 months of being able to live solely off this fund.
It is easy to let tomorrow worry about tomorrow, but this is not the way to establish a strong financial foundation. The choices you make today could very well make or break you in the future. Success isn’t just about your job or toys, it is your bottom line and how debt free you really do live. Exercise common sense in money management.
Gust Lenglet is the CEO of HBS Financial Group, Ltd., an accounting & tax preparation firm in Maryland. He has more than 25 years of experience in the banking and financial industry. Gust started his career as a loan officer at a major national bank, and then moved on to become controller of a major law firm. In recent years, he has written many financial articles that have been published on Ezine Articles and many websites.