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10 Basic Rules For Money Management

Rob Holland -- It's all about management. Whether you're just starting out or have had some life experience, when it comes to creating a sound financial situation, understanding the basics of how to plan, budget, and organize really pays.

Money management is extremely important to your financial well being. Here are 10 basic rules to help you get your finances into shape.

1. Plan your finances.

Plan for your families future, any major purchases you want to make and for the periodic expenses that come up ever so often such as birthdays and holidays.

2. Make long term and short term financial goals.

This includes everyone in the family. Helping children learn the benefit of setting financial goals will help them in the future. By learning to manage money, your children will be better in their own financial situations.

3. Know your financial situation.

You should know what your monthly and periodic expenses are each month. You should know what your monthly income is and keep track of your amount of debt.

4. Develop a budget and stick to it.

Do a planning budget and then compare it to your actual budget to see what you have actually spent. Learning to stay within your planning budget will help you develop better financial situations.

5. Trying going without your credit cards and learn to live on your income only.

Even try paying more than the minimum payment amount on your credit card balances.

6. Save money for a rainy day.

Put away some money each month. Literally pay yourself a small amount each month so that you are putting away some money for various things. By trying to put away 5% to 10% of your money each month, you will have a reserve fund that will help with most emergencies. Having a reserve fund of 6 months to 1 years worth of living expenses will help you keep from ever having a complete financial breakdown.

7. Keep up on your bills.

By paying your bills on time and in full, you will begin to build a good credit history. Good credit becomes such a necessary thing these days and by protecting yourself you will keep your expenses such as interest rates and fees down. This will help your financial situation greatly. If for any reason you are unable to pay a bill on time, contact your creditor and work out an arrangement.

8. Know the difference between your needs and your wants.

You must make your needs a priority and get those things on your want list when everything on your needs list has been met. Getting things on your want list is great but without taking care of your needs first, you are creating problems to your financial situation.

9. Control your credit.

Don't let your credit control you. If you use your credit wisely, you can make good use of your credit and help your credit score. Your credit payments should never exceed more than 20% of your net income. By knowing that figure than you can use your credit wisely to help you purchase things that you can not pay for to begin with. Automobiles and Homes are generally things that you should put into those categories, but you can even use it for recreational items such as Vacations, hobbies and other activities. Never ever use your credit to pay for another credit item. For example, never use one credit card to make a payment on another credit card. You are paying interest twice and really just throwing money away.

10. Know your daily expenditures.

If you are completely aware of where your money is going, then you can control where you money goes for the future. A spending diary will help you keep track of that information. Once you know where they money is going better control can be made where necessary. You may not realize that you're spending $20 a day on a sandwich and coffee because you feel that you're spending a couple bucks here and a couple of bucks there. But they add up and seeing the total each day of where your money is being spent will often open up your eyes to where money can be saved.

These suggestions are meant to help you determine where you can create opportunities for a better financial situation for you and your family. By following this advice you will find yourself in a stronger financial situation and teach your children how to better handle their finances.

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© 2009 Rob Holland

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