Money Management

Money Management

To manage properly money is a necessary skill and highly desired by many but it is a hard pill to swallow for others, which in itself shows the importance it plays in life money management.

Money management depends mainly on acquire habits that have been ingrained in any individual or developed by people with some degree of economic success.

These habits of preference are more effective while earlier appear in life of a person, because of it a healthy lifestyle will be derived from the financial point of view and away from the pressures that subjected and torture so many unhappy lives fighting for survive.

The difficulty is that this skill is not taught in traditional schools as colleges and universities, but through the Practical Education, that is why many people reach adulthood with a level of money management very low, where everyone is more prepared for attending to survive the daily living expenses such as food, toiletries, children’s education, and sporadic as clothing, travel, nightlife, etc.

To this one joins that the persons’ great mass in the world continues being hired on depending to live of an employment and that therefore the persons do not worry a lot of their economic future in the present, but they think that this will happen one day when a pension fund pays their contributions to them at the end of the labor life.

But there is also a widespread current of thinking especially in marginalized economic sectors where it is not given the importance to money management because it barely reach for the necessary, then that someday when a positive change happen in the current economic situation, then it’s time to look at the economic reality with new eyes and to practice new habits that create peace and abundance.

Of course this expected day never arrives and the situation remains on the edge of bankruptcy for a long time and in some cases end in total ruin.

According to T. Harv Eker Author of Best Seller “The Secrets of the Millionaire Mind”, money management starts with any level of budget to increase profits and reduce losses. So a person can be equally broken with a great income than with a small income.

Within proper money management practically there are a number of factors or variables to take into account that are:

A monthly budget of expenses:

Which constitutes for many a challenge, since the consumption generally is over-excited, consequently when less it is thought the persons get into debt or buy things that they do not need really. A monthly budget of expenses helps with very important form to control the expense and to be limited to a few economic before established goals. The concept of budget is understood badly for a great majority because they associate it with ” be depriving of “, which results in a psychological sacrifice or torture that they are not ready to pay.

Control of Emotions:

According to the world’s richest investor Warren Buffet, “the person who does not control his emotions do not control his money”, and this is one of the major economic problems of millions of people who make decisions having or without having money according to the emotions of the moment, which are generally uncontrolled and cause an increase in the ability of credit card debt or unnecessary expense for having a good time.

Lack of Financial Education:

Unlike the companies legally established that have a countable review with updated financial statements, general balance sheet and Profit and loss account, while many persons take mental accounts of their expenses without handling a leaf of balance sheet that allows them to measure their condition of current Heritage and the great majority it does not even know to certain science where they are located financially.

Although some financial mechanisms such as those previously mentioned are important, the relevant Financial Education for money management involves a much broader spectrum through constantly updated resource with practical issues: investment, expenditure control, economy, real estate, insurance, etc.

Setting Goals and Dreams:

The key point to manage money according to several experts in the topic is to establish economic goals that force to struggle to be achieved them and of this form they act  as stimuli to respect a spending budget while the economic objective is reached.

Attending priorities and commitments:

One of the unmistakable features of properly manage money is on attending financial commitments acquired, as a responsible householder will not splurge his family budget for the education of their children.

In this economic aspect debtors fail especially with credit cards, buying what is not essential with money that they do not have and then face legal charges that can not afford to ruin their financial and credit life.

New options to create income:

Though it it does not look like the administration of the money it is not a question of accommodating to a certain level of income and remaining stagnant suffering to administer every dollar, getting lost of all the economic rewards that exist today with the top technology, on the contrary in the measure into which the paradigms or models of thought change and open the mind to try more agile new economic options then there is acquired a major financial intelligence, which joined a suitable financial education will redound inexorably to a better administration of money.

A healthy economic environment influence:

Partnering with the right people in the economic aspect is more important than you think. As the popular saying goes “you cannot learn to fly like eagles standing among chickens”. The frequent company of people without goals, disordered, wasteful and irresponsible with their commitments and financial obligations dramatically and negatively affect the present and future behavior of everyone in money management.

Saving and Investing:

These two points are the most crucial in terms of money management is concerned, because when both operate in synchrony in the financial life of a person produce synergistic results. Namely economic rewards arising from this partnership are exponential.

According to the great guru on practical finance Robert Kiyosaki it should be save between 10% and 30% of the monthly financial budget for the only purpose of investing in the creation of financial assets: businesses, paper assets and real estate to produce permanent income where money works hard for the owner and not as commonly happens the opposite.

The most common objection of many opponents to this offer of saving for investment is in that their level of income or budget of expenses scarcely reache for the necessary things or does not reach at least, then wherefrom is it going to be extracted to achieve this saving programmed with a view to in the investment of assets?

The answer is very simple, retaining the basic economic activity and creating their own part-time business. Because it allows you to create a surplus in revenue to reinvest in the creation of financial assets.

We see then according to everything exposed previously the importance of administering correctly money and on how the economic tranquility and prosperity depend doing it, therefore bear in mind and put into practice the following orientations:

  • Learn to prepare a monthly budget of expenses, investment and savings and incorporates to your financial life this incredible tool that will provide security and economic direction in your activities (see recommended resources).
  • Control your emotions following the following recommendation, never take financial decisions based on the emotions of the moment, especially when money is scanty or you do not have money. For this take a prudent time to see if what you want is necessary, or if you can pay and how long. And please do not use credit cards to buy something you do not know how you will pay.
  • Actively invests time and money in your financial education practice. Now much easier than before given the progress that provides the global information network Internet through self downloadable resources.
  • Attend a minimum annual live seminar on investment, real estate, insurance, cost control, etc., and join forces with new people who share your goals and concerns.
  • Define by written exactly what you want out of life economically based on your monthly, annual income and a time horizon to five years.
  • In agreement with this it attend and respect your budget of expenses. Remember that what you do now depending on the financial goals that you have bring you over increasingly to your economic future.
  • Searching for new options to generate income. Especially when your income is low or does not extend to personal needs or your growing family. Bear in mind that to administer correctly the money does not mean to be deprived economically of your way of life, but to serve all economic fronts incorporating new sources of revenue.
  • Partner with leaders and people who have a healthy lifestyle habits, that are financially responsible and are example of improvement in their family, community and country.
  • On the basis of your monthly income monthly save between 10% and 30% to be earmarked for the construction of financial assets. These assets are: business, paper assets and real estate. Check the levels of investment and how to make an expert advisor in each subject.
  • Allocate 10% of your monthly income to invest or save for those personal taste or family you want: a holiday to a desired site, a meal at a nice restaurant, buying a vehicle, etc. Is also important that your brain perceives it’s not all work and sacrifice, but receives periodic reward and get used to a level of achievements each month. This will strengthen your financial muscle receptor.
  • Allocate from 50% to 70% of your income for compulsory expenditure: public services, education, clothing, etc.

For best results in practice and expand the concepts seen in this article on “Money Management”, know and use our:

Recommended Resources:

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