Let’s get started thinking about money. We know where it comes from- work. Of course you could consider the rare instances of gifts, inheritance, or even lottery winnings- but this isn’t what we are talking about here. We get money when we do work that has value. The harder the work or more skills the job requires, the higher demand those skills are in, or the less desirable the job is, often leads to higher pay.
What takes away money? Buying stuff does of course. But so does inflation (discussed in another article in this section), taxes, expenses and emergencies. Obviously the money you are left with after all your outgoing money is subtracted from your incoming money is what you can save. It’s your Net Income. If you spend more than you make then you have a negative net income and you are probably going deeper and deeper in debt.
The Basic Concepts
In order to succeed with our money we have to manage all aspects of it- we need to be aware of what’s going on with our finances and make the best possible choices. This takes a proactive attitude and some time spent learning and making necessary changes. Are you willing to start learning to improve your situation? If not then you aren’t ready to be here. Ask yourself why you are so reluctant? Why put it off or deny your responsibility? You’ll only have yourself to blame. Ok, are you ready now?
Good money management has a few core concepts that provide you with a solid foundation:
1. Increasing income and maximizing our earning potential. Getting the best job we can, and making the most of our career path. This might involve upgrading our skills so we can go after a higher paying job. Or it might mean doing our best and finding a good company to work for.
2. Decreasing our spending. Say no to junk! We need to get a firm grip on casual spending and impulse buying. We need to find bargains where we can, and avoid paying any more taxes than we have to. We have to take a honest look at what is truely important: our financial health or keeping up with the neighbours?
3. Organizing our financial life. Knowing where our money is coming from and going to in a written budget is a good way to stop the leaks and to get a reality check. Knowing what we have for expenses and debt can keep us on top of them and prevent missed payments. Getting real about having emergency money and a long term plan for reducing debt and saving for retirement can take away the stress of not knowing what to do.
4. Stopping the debt addiction and getting debt free. If you are living on more than you make, and stacking up debt past your eyeballs, then you need to make a change fast!
5. Get a plan for long term saving. Learn about investment types and get a plan for your retirement. Start today. Right now! The sooner the better. Know what inflation is and how it is robbing you of the value of your money, and what you can do about it.
These core concepts are a sample of what will be discussed on this site- this info will get you started and motivated to learn more and take action!