When seeking money management advice, it is sometimes difficult to sift through the myriad of facts and often conflicting opinions expressed in books, the media, and online.
What is money management?
The best money management strategy should focus on four key areas of your personal financial strategy: information, planning, control, and saving and investing.
To get started, you need good information about your current financial situation. How much income do you really make after payroll taxes and withholding deductions? How much do you spend? What do you spend it on? If you are not sure, try to keep track of spending for one month.
Once you have the financial information you need, you can use it to start planning. Planning takes place on two levels. First of all, develop a financial freedom plan to define your long-range goals and give you a road map to financial success.
Secondly, use personal budget planning to help you focus on the day-to-day income and expenses. Use it to sort out what you need vs. want. Update both of these plans often, because your financial situation changes over time.
This may be the most challenging aspect of money management. Use your budget to help you control your spending. Make your difficult decisions when you are rationally planning your budget, rather than when you have the opportunity to make impulsive choices. Use automatic money management techniques where possible. Also, make sure you are saving money by spending wisely.
Saving and Investing
Now comes the fun part! When you are actually spending less than you earn, it is time to make your money grow by learning how to invest money.
This step is sometimes neglected by people who master the other areas of money management because they don’t understand the importance of saving money. It is, however, essential to reaching the goal of financial freedom.
Sound money management advice, if followed correctly, can show you how to reduce financial stress and guide you to financial freedom.
Here are some related articles on money management that you may find helpful:
Money Management for Kids
It is best to start teaching kids about money issues at a young age. Here are some great ideas to get you started.
Money Management for Teens
Teens need guidance in a number of issues including how to handle money. This article gives some sensible advice to help teens learn about spending and saving.
College Student Money Management
College is a time for many people to start exercising their independence. If you are in college, read these suggestions to help you make wise decisions about your money.
Finances In Marriage
Learn the importance of communicating with your spouse about money. When couples work together as a team on their finances, they strengthen their marriage.
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