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How do I Choose the Best Strategies to Manage Money?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 August 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Managing money is a task that requires careful consideration if you plan on becoming financially secure. While there are all sorts of seminars, instruction books, and other resources to help you learn how to manage money, most include a core group of basic strategies that can help just about anyone improve their fiscal condition and plan for a better future. Managing your money will not only help you financially, it can also help you enjoy life a little more.

The first step to money management is to learn to identify the difference between a need and a want. Needs are items that are necessary in order to enjoy an equitable standard of living. For example, items such as food, clothing, and shelter would be considered a need in most households. However, a want is something that would bring some degree of satisfaction, but is not necessary for your well-being. A good example of a want would be a large screen television.

If you want to manage money effectively, address your needs first. Once those have been provided for, you can consider the possibility of indulging some of your wants. There are a couple of other things you should do before spending the money left over after providing for food, clothing, and shelter.

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Saving money is extremely important to your future financial well-being. If you have trouble accomplishing this, have a small amount deducted from each paycheck for direct deposit into a savings account. Don’t allow the fact that you can only deposit a small amount each time discourage you. Over the course of a year, that series of small deposits will add up to a significant sum that is generating interest.

If you really want to manage money effectively, set up a workable household budget. Be realistic in terms of which expenses you must meet each month, and how much income you can reasonably expect to generate. It is discouraging to work with a budget that is based more on an ideal income, and not on how things really are.

Once you have that budget in place, stick to it. At times, this may prove very difficult, especially when you see items that you want very badly. However, staying with the budget will allow you to incrementally build up a surplus that can be used from time to time to purchase a few of those wants. You will find that setting goals that allow you to get the things you want without putting your finances in jeopardy will make you appreciate those purchases all the more.

At the heart of the effort to manage money must be the constant reminder of an old adage regarding the relationship between income and expenses: when your outgo exceeds your income, then your upkeep becomes your downfall. Learning to live within your means leads to a degree of freedom that is not possibly any other way. Take some time today and develop a workable strategy for achieving your financial goals. In a few years, you’ll be very glad that you made the effort to manage money and build up those savings and other resources.

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