10 Golden Rules of Money Management2 min read
10 Golden Rules of Money Management
PLAN YOUR FUTURE
Plan for the future, major purchases and periodic expenses. You will not arrive to “financial freedom” parkway, without a road map to guide you. Follow your plan.
SET FINANCIAL GOALS
Determine short, mid and long-range financial goals. Continue to nurture and adjust your goals monthly. Evaluate your shortcomings and celebrate your achievements.
SAVE YOUR MONEY
Save for periodic expenses, such as a car and home maintenance. Save 5%-10% of your net income. Accumulate at least 3 to 6 month’s salary in an emergency fund.
KNOW YOUR FINANCIAL SITUATION
Determine monthly living expenses, periodic expenses and monthly debt payments. Compare outgo to monthly net income. Be aware of your total indebtedness.
DEVELOP A REALISTIC BUDGET
Learn to budget and follow your spending plan as closely as possible. Evaluate your budget. Compare actual expenses to planned expenses.
KEEP A RECORD OF DAILY EXPENDITURES
Be aware of where your money is going. Use a spending diary to assist you in identifying where adjustments need to be made.
DISTINGUISHING THE DIFFERENCE BETWEEN WANTS AND NEEDS
Take care of your needs first. Money should be spent for wants only after needs have been met.
DON’T ALLOW EXPENSES TO EXCEED INCOME
Avoid paying only the minimum on your charge cards. Don’t charge more every month than you are paying to your creditors.
USE CREDIT WISELY
Use credit for safety, convenience and planned purchases. Determine the amount that you can comfortably afford to purchase on credit. Don’t allow your credit payments to exceed 20% of your net income. Avoid borrowing from one creditor to pay another.
PAY YOUR BILLS ON TIME
Maintain a good credit rating. If you are unable to pay your bills as agreed, contact your creditors and explain the situation. Contact credit.org for professional credit and debt advice and inquire about our credit counseling service.