10 Steps to Better Money Management
Pay yourself first. This is an important concept for getting ahead
financially. Treat savings as a fixed expense. For many people
it is easier when savings are deducted from the paycheck and deposited
in 401(k)s, 403(b), savings bonds, etc.
- Keep Good Financial Records – Develop a filing system
for your family’s financial records. Make a folder for each
savings for investment that you own. Save annual summary statements
from investment accounts. These can be used to help calculate
your gains or losses a time investments are sold. Make it a practice
to reconcile your checking accounts regularly. Keep your household
inventory up to date and compare with insurance coverage. Be sure
the insurance is adequate.
- Insure against Large Financial Risk – Review your insurance
coverage annually. As your financial situation changes, and as
your family situation changes be aware of increase or decrease
in need for insurance. For example: a retire no longer needs disability
insurance, but all other bread winners probably do. Inflation
may increase the need for additional homeowner’s insurance.
Increase in net worth may increase the need for liability insurance.
Explore your family’s need for umbrella insurance. The need
for life insurance may increase or decrease based on:
- Why you purchase life insurance
- Size and composition of your family
- Family’s assets and other factors
- Invest for Long Term Growth – Plan your investments and
work your plan. Don’t jump in and out of the market based
on this week’s, month’s, or year’s performance.
Keep history of the stock market in mind over the past 100 years
stock prices have appreciated on average 7% per year.
- Use Credit Wisely- Shop for credit! Don’t accept the first
offer you receive. It is recommended to get at least three quotes
before selecting a lender. Compare the annual percentage rate
and other features of the loan. Always repay according to the
terms of the loan. If by chance you have problems, call the lender
and explain the situation.
- Plan for Retirement – Social Security and pensions probably
will not provide enough money to live in retirement as you now
live. Determine how much you will receive from all sources and
how much you will need to live at your desired level. Adjust for
inflation, then determine the gap in income. Develop a plan to
fill that gap. Extension Publications can assist you with retirement
planning.
- Set Specific Financial Goals – Determine with your family
what you want, when you want it and what it will cost. An example
might be a new house with a down payment of $20,000. you want
the house in 2006. between now and 2006 how much must you save
each month to accumulate the down payment? You might use the S.M.A.R.T.
Goal activities to develop the plan.
- Live Below Your Means – Always spend less than you make.
Save a specific amount of your earnings for example 10%. Track
your spending to find ways that you can accomplish this goal.
Record everything you spend for a month. You will probably find
a number of leaks. For ideas of ways that you can plug leaks see
“Leaks in Spending” from the EDIS website: http://edis.ifas.ufl.edu/pdffiles/FY/FY58000.pdf
- Go to School – Get educated – take some courses,
watch money management programs on television, read financial
books, and/or consult a financial advisor.
Five factors often mentioned by millionaires as being important
to success according to Thomas Stanley in his book “The
Millionaire Mind” are:
- Integrity – being honest with all people
- IDiscipline – applying self control
- ISocial skills – getting along with others
- IA supportive spouse
- IHard work – more than most
- Think Positive – When facing challenges – and you
will – a positive attitude is important. Anyone can give
up and say: “I’ll never be able to save any money.”
And as Henry Ford once said: “If you think you can or if
you think you can’t, you are right.” Or another way
to say it is: “If it is to be, it’s up to me.”
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