Believed to be like a drug, money can be addictive. You tend to spend as much as you earn, often more quickly. Learning how to manage your money can help avoid the financial problems and even bankruptcy some people are facing.
There are two rules that everyone, young and old, should learn about money. The first rule is ‘don’t buy what you can’t afford.’ The second rule is ‘always pay your bills.’
Money Management Rule One
Don’t buy what you can’t afford. This is a simple rule, but somehow few people understand how to follow it. This is because we overestimate what we can afford. Some suggest that you should always have at least six months of living expenses in the bank for safety in case you lose your job. This is a good rule, but what constitutes living expenses?
Living expenses are necessities. Necessities include your rent or mortgage, utility bills, car payments, taxes, and certainly food. It does not mean that great pair of shoes you saw in the window, a new flat screen television, or a trip to the Caribbean. The term necessity also assumes that if the worst happens and you do lose your job, you will immediately eliminate the extra niceties that you can no longer afford.
This is the time to call the phone company and sign up for a budget plan. Call the cell phone company and eliminate your texting and mobile internet service. Call the cable company and cut down on the extra channels that you are paying for but never watch, or even cancel the service all together if you can handle it. But, always check first to see if you will incur a penalty for cancellation. Penaties can be big, so it may be cheaper to keep the service intact until your contract ends.
Other than the basic necessities, you also need to keep money aside for emergencies such as unforeseen healthcare bills, car repairs and home maintenance. You need to be able to have your health attended to, drive to and from work safely and live comfortably in your home, and these must be considered when saving money as well. Most important is not to waste your emergency money on luxuries or things you don’t really need.
Money Management Rule Two
The second money management rule is to pay your living expenses first, before anything else. If you take something and don’t pay for it, it’s theft. Not paying your bills equates to the same thing, although it may not be treated the same way.
We are bombarded daily with images of material things, and actively encouraged to ‘live up the Joneses’ and buy the latest and greatest. Unfortunately, doing so does not make us the greatest. Does anyone really care that someone managed to walk into a store and buy something, like we all do every day?
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Topics: Personal Finance | Comments Off
MLA Style Citation:
Davis, Timothy "Two Rules To Manage Your Money." Two Rules To Manage Your Money. 2 Jul. 2010. uberarticles.com. 30 Sep 2014 <http://uberarticles.com/finance/personal-finance/two-rules-to-manage-your-money/>.
APA Style Citation:
Davis, T (2010, July 2). Two Rules To Manage Your Money. Retrieved September 30, 2014, from http://uberarticles.com/finance/personal-finance/two-rules-to-manage-your-money/
Chicago Style Citation:
Davis, Timothy "Two Rules To Manage Your Money" uberarticles.com. http://uberarticles.com/finance/personal-finance/two-rules-to-manage-your-money/
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