Free Tips on Eliminating Bad Debt

Managing Your Money

Filed under: Manage Your Money — Gloria and Alpha @ 10:27 pm

I’m often astounded that there is no education in our school systems about how to handle money.

• What money is
• What money is not
• The different ways to save money
• The different ways to spend – which ways are fruitful and which are fruitless
• What you can do with money – apart from the obvious
• What money is not for
• How to spend money so that it works for you
• What happens when you spend money  foolishly – short-term and long-term repercussions
• Money and investing
• The different types of investing
• Money and borrowing money
• The many options for borrowing money available today
• What credit cards are
• What credit cards are not
• And so on, and so on
  

I have taught at the secondary level for over 30 years in diverse subjects and none of the above points were addressed.

Is it any wonder that only about 3% of the population are wealthy and most of the remaining 97% have massive credit card debt, live above their means and live and buy up as though there were no tomorrow.

Here is a process I’ve founded to be easy and successful.  It allows you to not only save your money, but also to have some “play” money set aside to have fun with.

First, write up a list of things that you want to spend your money on.  Here is an example (not in any particular order):

• House
• Investment / Retirement
• Personal and Professional Development
• Education
• General Bills / Spending Money
• Travel / Holidays
• Hobbies

Next, establish the percentage you want to assign from what you earn to each of these categories.  See the pie chart for an example of a breakdown.

Open a sub-account for each of these at your preferred financial institution.  For example, with ING Savings Maximiser you can have one overall ‘profile’, and separate accounts under this profile.  The accounts are also higher interest yielding, so you are also earning interest on what goes into each sub-account.  Do some research and choose the account that suits your needs the best.

Now, make a list of your bills, and write down the monthly amounts you need to set aside for these.  Include a monthly equivalent breakdown for larger bills that don’t arrive monthly (such as the rates, car servicing, utilities, etc).

If you get paid a set amount each month, calculate the actual dollar amount you need to put into each of the different sub-accounts, based on the percentages you’ve decided on.  Take a look at the amounts and make sure they will suit your needs.

Then, all there is left to do is START SAVING.  Test your new system and make sure that it works.  It is very rewarding to see your bank balances keep increasing each month, and you’ll find that you’re less inclined to want to spend your savings, as you see the balances keep going up!

Make sure you do stick to it.  If there is something that you want, but your account balance won’t quite cover it, either reconsider whether or not it’s worth spending all your savings on this item, or, consider waiting a little longer before buying, so you can save for the full amount.

Another BIG ACTION is to STOP relying on credit cards.  If you have become too accustomed to this, start using only cash to pay for things, and get your credit card balance down.  Once you’ve done this, you can start using your credit card again, but make sure you keep it manageable, and pay it off each month.

This process can take a few months to get used to, and it may even take a year to get your finances back into your control.  It is worth it though, so persevere.

Bookmark It

Hide Sites

More Information on Eliminating Debt