Your ticket to financial freedom doesn't lie in getting a raise (though that might help) or enlisting the services of a whiz personal finance consultant. Your ticket to financial freedom lies in mastering basic money management. Effectively managing your money is not as difficult as the gurus on MSBNC might make it seem. All you need to do is regulate your finances by logging income and expenditure, set motivating financial goals and save for a rainy day just in case your car unexpectedly catches on fire or your company is hit with a round of layoffs.
Regulate Your Finances
Know your household's monthly income, the amount spent on bills and the average spent on entertainment and miscellaneous purchases. Knowing the exact amounts that are added and extracted from your bank account each month helps you save on overdraft fees and unexpected payments. For example, say your family's monthly income is $3,100. Let's say your bills amount to $2,200; leaving you with $900 extra to play with each month. Budget approximately $300 for activities and entertainment and you're left with $600. Sure, you can buy a pair of shoes and a set of golf clubs every now and then, but your money is put to better use earning interest in a savings account.
Save for a Rainy Day
Even if you feel you have job security, plan for the possibility of a rainy day. According to the Mountain State Center for Independent Living, you should have enough savings in the bank to cover at least three months of bills and expenditures. If your income doesn't allow for you to rapidly build your savings, consider cutting back on the little extras. Just getting rid of premium cable channels can save hundreds of dollars a year. Downgrade to the basic phone package and internet access. Clip coupons for further savings.
Set Financial Goals
Setting financial goals is an effective way to weed out unnecessary spending. If you have a specific goal in mind, you are more likely to set aside money than if you had no specific plans for your savings. Determine how much money you will need and when you'll need it. Divide the total amount by the number of months until you need the money, and you know how much to set aside each month. Short-term goals are attainable in less than one year, mid-term goals are attainable within two to five years, and long-term goals will take five or more years to reach. An impending wedding is an example of a short-term goal you would be willing to save for. A more propelling financial goal is saving for the birth of your child. If you want your daughter to have a nursery fit for a princess and want to quit work to be a stay-at-home mom, you need to save accordingly, building up a nest egg to cover those future expenses.
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