5 Tips on Managing Your Finances.
The one major rule for managing your money the right way is “don’t spend more than you earn”. This principle sounds simple but is actually harder than we think to follow. Here are some tips to help you manage your money the right way:
1- Analyze, understand and know your financial situation. Sit down and look at your expenses, spending history, assets and savings. Knowledge of your financial situation will help you understand your overall financial status and if you are on the right path to your goals. Be realistic and honest about your financial history. If you lie to yourself about this you might be hurting yourself or your family in the long run.
2- Create a budget – Now that you know your financial history, set a monthly budget. This will help ensure that you are not spending money that you don’t have and will lead to a happy retirement. It will also help you understand what your bad spending habits are while helping you prepare for emergencies. Be sure to include an emergency fund and a retirement savings plan as a part of your budget.
3- Keep track of this budget over time – One of the hardest parts about establishing a budget is that it can change over time. Your responsibility is to keep track of those changes so you have knowledge of where your money was spent.
4- Spend what you have, not what you hope to make. This statement applies mostly to individuals who have a commission component in their salary. These individuals will sometime be in a position to close a large transaction and feel as if they already got paid on it. This could be very dangerous especially if that large transaction falls through.
5- Asking for help – Financial advisors assist clients with creating a solid financial plan. They incorporate all aspects of your finances including minimizing taxes, offsetting risk and helping plan for insurance. They also know and understand all of the different financial mechanisms available that match your specific case.
Are you spending more than you earn? Do you have a retirement plan in place? Is your financial situation where you want it to be? Please feel free to contact me for an overview of your finances.