Category Archives for "Managing Money"

Budgeting Basics

Everyone begins at the beginning: setting up a plan for deciding in advance where and how to spend income and deciding how to use any excess for the benefit of self and family.

The first step in the process is to keep track of every penny spent for a brief period – usually one month. Next, choose what changes, if any, to make in future months.

Keeping track can be done through a bank account, with a special financial planning software, or a handwritten journal.

Once it is clear that a preferred pattern of spending and accumulation is in place it’s time to make it official with a system that will guide you in the future.

Your system can be as simple as using the envelope plan, a journal, assigning a category for every expense through your bank account, or use of financial planning software.

Money and Time

A key concept of managing money is that of the Time Value of Money. The sooner money is received and put to work earning compound interest, the greater the value of that money. 

Look here for more details.

Investment Terms

Understanding successful investing and money management requires a basic knowledge of the language of investments. 

There is no single place where all of the language is offered. For example, real estate, one of the main sources of investment wealth is outside of the source which is recommended here. It will be covered at another time.

Check out this investment language source here.

Storing Valuables

In the 1970s we were advising people to purchase and hold for security gold, bullion coins and investment quality semi-precious stones. 

Most advisors today recommend keeping several months or more of cash on hand for living expenses. It is worth considering the means to store cash for future needs. 

Here is an article from Financial Finesse about some of the choices to consider. 

Using a Budget

The foremost tool for managing money is a budget. A budget is a simple plan and forecast of where cash flow will be sent. Following a budget is the most powerful money habit anyone can have.

Naturally, everyone has expenses for living. Taxes must be paid if not from withholding at work then in some other way.

Married couples will achieve the best results if both parties are agreed upon the near and long term plans for their finances. One popular system for couples is to have three accounts: Ours, His, and Hers.

To get started, keep track of expenses as they are paid. A good way to do this is to use a bank that permits each item to be assigned to an expense category. An excellent online bank for this is USAA.com.

Adding up each category at the end of the month will show a pattern. If the pattern is agreeable, fine. If not, this is the time to make adjustments and decide where to make changes in spending targets.

Enormous advantage is gained by choosing as early in life as possible to save part of every dollar earned, after taxes and before expenses. Pay yourself first. Then allow compound interest to give birth to more dollars as they are earned on your savings dollars.

Begin now. These simple steps are your path to Wealth Without Worry.