Many think that managing own finances does not come much in handy. But this not so; take it from me. However little money you may earn, and whether you spend on others or on yourself, it is always better to have an idea of the gross amount, and the money expended or invested. Then you will know where you stand with your finances.
Collect and Document Assets
As a first step, have an accounting of all your financial holdings, including bank accounts, stocks, retirement account balances and other funds. The sources of income including real estate, investments, petty cash and savings; all this must be brought to list.
For keeping control on your personal finances, it is better to track all expenditures for a fixed period of time, say one month. As expenses, cover all mortgage payments, utility bills, credit card purchases, student loan payments, debit card transactions and other such expenses, even small expenses like bus fare and coffee bills. Tracking the expenses is a crucial step. It helps you to have an idea of your expenses, letting you identify and eliminate overspending, compulsive shopping or other financial misdeeds.
Create Actionable goals
You should have clear, action specific financial goals for successfully managing personal finances. Set apart willfully a fixed sum every month, towards credit card debt, some amount to a child’s college savings account, or invest in some retirement account. Stated specific goals become a reality easily. So specify dates and the exact amount of money for it. Put up goals somewhere, to be seen by you often.
You will have a direction to your actions if you put up priorities while managing personal finances. Your priorities can be categorized as primary and secondary goals, to have the money guided according to priorities.
Debts should be classified as good and bad between them. To take loans for education, home or college is not a bad idea. Such loans can be considered as investments with a relative staying power. But CNN Money advises caution against accumulating credit card balances for the payment of food articles, vacations etc. The first priority to be towards paying off high-interest balances, and if possible making more than the minimum required. Do not take advances against long term investments, such as a home or retirement account.
Keep in mind that money management is not a silly affair, but a task to be completed with seriousness, and something that can decide how much money you have at the end of each month.