People use their intelligence to learn skills and acquire knowledge. Often the process of learning is dull. However, everyone likes the subject of money. People dream about it, spend it in reality and in imagination, earn it, and all too often watch it slip through their fingers like water. However, as you increase your financial IQ, you will have a better chance of controlling your money and your future.
How-to-get-rich books have been around forever. There seems to be a new one coming out every day. Financial advisers compete for the privilege of guiding your investments. Radio talk show hosts offer free advice to those who phone in. People counsel you to get out of debt, show you how to make pennies go farther, teach you how to make money in the stock market, and show you how to avoid paying taxes.
The first step is, of course, to have some money to manage. People who live paycheck to paycheck, spending their income as fast as they get it, are not in a management position. There are some basic tools to help with this situation, as well as tried and true advice.
Making a budget is something that most people resist. Often it is simply because the thrill of spending money as fast as it's made is hard to resist. Sometimes people think the process is difficult. Budgeting is simply balancing income with outgo, while breaking finances down into categories. Having a budget - and sticking to it - is the foundation of financial wisdom.
Recurring expenses, or 'fixed' expenses, are things like rent or mortgage payments, car payments, alimony or child support, and utilities. These things can't really be changed. Knowing what percentage of your income goes to this sort of expense is important in understanding the whole picture.
Things not in these categories are areas in which you will have more discretion. Food is something you cannot do without, but you can buy wisely or foolishly. The same thing applies to clothing, recreational spending, and household supplies. Attention paid to detail can mean a bit of money left over after everything is taken care of.
Everyone should be able to save at least a part of every check. Having an emergency fund means that unexpected purchases - like a new tire for the car or a new blouse after one is ruined by spaghetti stains - won't have to be paid with - gasp - credit. Buying on credit is something most of us need to avoid like the plague, since it makes everything cost more in the end.
Budgeting and saving are the foundation for money management. Plan and act proactively rather than reacting to each new impulse or money crisis. Once the foundation is laid, things like investing follow. Learning to make money work for you rather than for someone else - like a creditor - is key to success. Proceeding step by step to sensible goals is the way to financial wisdom.
How-to-get-rich books have been around forever. There seems to be a new one coming out every day. Financial advisers compete for the privilege of guiding your investments. Radio talk show hosts offer free advice to those who phone in. People counsel you to get out of debt, show you how to make pennies go farther, teach you how to make money in the stock market, and show you how to avoid paying taxes.
The first step is, of course, to have some money to manage. People who live paycheck to paycheck, spending their income as fast as they get it, are not in a management position. There are some basic tools to help with this situation, as well as tried and true advice.
Making a budget is something that most people resist. Often it is simply because the thrill of spending money as fast as it's made is hard to resist. Sometimes people think the process is difficult. Budgeting is simply balancing income with outgo, while breaking finances down into categories. Having a budget - and sticking to it - is the foundation of financial wisdom.
Recurring expenses, or 'fixed' expenses, are things like rent or mortgage payments, car payments, alimony or child support, and utilities. These things can't really be changed. Knowing what percentage of your income goes to this sort of expense is important in understanding the whole picture.
Things not in these categories are areas in which you will have more discretion. Food is something you cannot do without, but you can buy wisely or foolishly. The same thing applies to clothing, recreational spending, and household supplies. Attention paid to detail can mean a bit of money left over after everything is taken care of.
Everyone should be able to save at least a part of every check. Having an emergency fund means that unexpected purchases - like a new tire for the car or a new blouse after one is ruined by spaghetti stains - won't have to be paid with - gasp - credit. Buying on credit is something most of us need to avoid like the plague, since it makes everything cost more in the end.
Budgeting and saving are the foundation for money management. Plan and act proactively rather than reacting to each new impulse or money crisis. Once the foundation is laid, things like investing follow. Learning to make money work for you rather than for someone else - like a creditor - is key to success. Proceeding step by step to sensible goals is the way to financial wisdom.
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