5 Golden Money Management Rules that Everyone Should Know!
Show your money who is the boss by ensuring that it remains your loyal slave instead of the other way around. And a good way to do that is to manage your money wisely. There are certain cardinal money management rules that if followed could result in improvement in your financial life.
Here we present to you 5 golden rules that will empower you to take control of your financial life. Following these rules can help to you remain financially solvent avoid relying on debts to cover your expenses.
1. Keep Track of Your Expenses
The foremost money management advice is to keep track of your expenses. You could use good money management software to monitor all your expenses during a particular day, week, month, and year. You need to keep a record of all your expenses – big or small. This will help you to identify wasteful expenses and avoid splurging on them the next time around.
2. Save, Save, and Save More!
Savings help you when you are facing tough financial times. Whenever your conscious gives you a choice between spending and saving, you should opt for saving your money. You would never go wrong when you decide to save money. Save first for your unemployment emergency fund, then your nest egg and finally for any future essential expenses like child’s education, medical bills, house or car repairs, etc.
3. Invest your Savings
The third golden rule about effective money management is to invest your savings. You should not let your savings sit idle in your accounts. It is important to let your money do the work for you by investing in stocks, managed investments, and other financial instruments. You should invest your money to see greater returns on investment.
However, do note that investing money on almost all financial avenues involve certain amount of risk. The extent of the risk depends on the type of financial instrument that you have selected for your savings. Generally, stocks and bonds entail the greatest amount of risk, while precious metals like gold and silver have the least risk of investment. However, the more the risk, greater is the return potential of the financial instrument.
4. Hide Your Credit Cards
Credit cards are not necessarily evil. They come in handy when you have to pay for essential expenses but do not have the required money to do so. That being said, you should try to limit the use of credit cards. It is important that you pay off your credit cards at the end of each month. Banks charge a hefty level of interest for credit balances. The longer you take to pay off your credit account, more you have to pay to the credit card company. That is why you should utilize credit cards only during emergencies and rely mostly on cash to pay for your expenses.
5. Plan for the Worst but Expect the Best
The fifth, and final, golden money management rule is to plan for the worst when making a budget. Any one of you associated with the accounting profession may be aware of the accounting principle to record expenses when they seem likely. The same principle applies to household budgeting.
The above golden rules contain the essence of effective money management. The power to improve your finances lies with you. Do you have any more to add regarding this topic? You should let us know by commenting on the box below.
A Selection of Money Quotes
“Don’t count your check-ins before they cash.” ~ Vanna Bonta
“Money is hard to earn and easy to lose. Guard yours with care.”
~ Brian Tracy
“Financial sense is knowing that certain men will promise to do certain things, and fail.” ~ Edgar Watson Howe
“The art of living easily as to money is to pitch your scale of living one degree below your means.” ~ Sir Henry Taylor