For many Americans, their personal finances and money problems can translate into personal problems during tough economic times. How do you survive in good times and bad? There are 3 ways you can solve money problems:
1) Saving money is one way to solve your money problems. It may sound counter intuitive, especially when you are in debt up to your eyeballs but it isn’t. Savings is the only way you are going to pay off those debts, isn’t it? Think about it, you have to spend less than you make, and that is – by definition – saving money.
2) Make more money. This is closely related to saving money. There are a lot of ways to make more money. Some of them require the use of your imagination (i.e. starting a “gopher” business where you will offer to deliver whatever someone wants for a service fee). Sometimes it requires working overtime at your present job if it is offered. Sometimes it means changing careers.
3) Reading. This is one that most people don’t expect to see. You need to educate yourself if you are going to get ahead in life. It doesn’t matter what field you are in, you had to learn how to become a professional in whatever you are doing right now. And, if you are in an entry level job, you still needed some type of education – some type of training – to do what you do now. Finance is no different. You can’t automatically be good at managing money without becoming educated on what it means to budget money, invest money, and so on.
These three suggestions should get you started, but are by no means the end-all, be-all for achieving financial success. You can kiss your money problems goodbye, but it will take a lot of work on your part.
By: David Lewis
Posts Tagged ‘Managing Money’
Finance, Money, & Personal Problems – 3 Ways to Solve Your Money Problems
March 21st, 2010Where Did My Money Go? 5 Pillars of Money Management
January 5th, 2010
Let’s be honest, money can be slippery. It can slide out of your hands before you can even say, “goodbye.” For most of us, spending money isn’t the problem. It’s holding on to it and making it grow that gives us the most grief.
While I was doing the research for my first book, “Cool Stuff” They Should Teach in School, I interviewed financial planners, investment analysts, and wealthy businesspeople. After collecting this information at the ripe old age of 17, I was seriously confused. But after writing, reading, and re-writing about the topic, I began to notice a pattern of basic money management rules emerge.
I learned that managing money correctly doesn’t have to be an overwhelming process. Those people who are financially free tend to live by five very simple principles.
Rule #1: Take responsibility
One of the biggest myths I see today is that we all deserve a great life full of nice things, plenty of money, and tons of happiness. The truth is, there is only one person in charge of the quality of your life … you!
The first step to becoming financially independent is to take responsibility for your own money. When, where, and how do you spend your money? Those questions may seem obvious, but most people hesitate to answer them. Be aware of your spending habits. All of these rules are related, but you have to realize that your actions determine whether you’re digging for spare change in the couch or flying first class to Fiji on your vacation.
Rule #2: Pay yourself first
It may seem selfish, but if you don’t pay yourself first, you’ll never be financially set. This means take the first ten percent (or more-it’s your future) of what you earn and invest it right away. Remember, money never seen cannot be missed.
My parents introduced this rule to me at a very young age-even though I was only getting paid one dollar an hour. Today, I thank them for it because I now have money saved up for emergencies and have laid a strong foundation for my future.
Rule #3: Give before you get
You don’t get a tree unless you plant a seed. And investing requires the same process. You’ll never become rich unless you plant your money into a worthwhile investment. The more time that passes, the more your money will grow. (That’s right, just like a tree)
Your dreams will come true as a result your own responsibility, sacrifices, and patience. For two summers, I sacrificed tons of time I could have been hanging out with friends and going to the beach in order to finish my book. But giving my time and effort has contributed to getting the life I want. In other words, we might have to give up some things now, to make things easier (or better) later on.
Perhaps Zig Ziglar said it best: “Do the thing things you need to do when you need to do them and the day will come when you will be able to do the things you want to do when you want to do them.”
Rule #4: Opportunity cost
Whether you’re buying a coffee, an expensive outfit, or a car, each choice you make has an opportunity cost. In short, this means that when you make one choice, you’re giving up another alternative. Any decision that leaves you with two or more choices is an example of opportunity cost. Essentially, we are all faced with the same situation … We must choose between “the pleasures of the now” or delayed gratification. Each dollar we spend shapes our financial condition. How are your money management decisions contributing to your future?
Rule #5: Get your money to work for you
There are two categories we spend money on.
i) Assets
ii) Liabilities.
To simplify things, I like to call these Money Eaters and Money Makers.
The name gives it away; you don’t want to spend the majority of your money on liabilities or Money Eaters (ME) because these things will devour your dinero. Look at these purchases as junk food to your bank account. It’s money that you spend on yourself for immediate pleasure, hence the first letter of each word: “ME.” Money Eaters are things you buy that decrease in value once purchased, (music CD’s, clothes, stereo equipment, etc.)
On the other side, you want more of the M&M’s … or the Money Makers. Like the name suggests, these are purchases that allow your money to grow or investments that increase in value. This is what some people refer to as, “making your money work for you.” Yes, it’s definitely a good thing.
Think before you spend. If you spend too much money on “ME” you’ll never have the freedom you really want. Search for M&M’s and invest in things that will make you more money … not eat it. Don’t just work for money, have your money work for you.
- Kent Healy
By: Kent Healy
