10 Basic Rules of Money Management
How many of these 10 common-sense guidelines do you know? How many are you truly putting into practice? As you read through the list, ask yourself how well you're really doing on each point thinking through your financial habits and patterns. You'll be well on your way to taking control of your money!
- Plan. Plan for the future, for major expenses and for periodic expenses.
- Set financial goals. Determine short, mid-range and long-range goals.
- Know your financial situation. Determine monthly living expenses, periodic expenses and monthly debt payments. Compare expenses to monthly net income. Be aware of your total indebtedness.
- Develop a realistic budget. Follow your spending plan as closely as possible. Evaluate your budget, comparing actual expenses with planned expenses.
- Do not allow expenses to exceed income. Avoid paying only the minimum on your charge cards. Do not charge more in a month than you are repaying to your creditors.
- Save. Save for periodic expenses, such as car and home repairs. Save 5% to 10% of your net income. Accumulate three to six months' salary in an emergency fund.
- 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.
- Determine needs versus wants. Take care of needs first. Money should be spent on wants only after needs have been met.
- Use credit wisely. Use credit for safety, convenience and planned purchases. Determine the total you can comfortably afford to purchase on credit. Do not allow your credit payments to exceed 20% of your net income. Avoid borrowing from one creditor to pay another.
- Keep a record of daily expenditures. Be aware of where your money is going. Use a spending diary to identify areas where adjustments need to be made.
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