Investment & Financial Articles
Title: HOW TO MAXIMIZE YOUR "HARD-EARNED" MONEY
Author: Craig Lock
Article:
"Whatever you have, spend less" - Samuel Johnson.
Every day we make decisions about money, which have an effect on
our standard of living. Sometimes they are only small ones, not
related to the above-mentioned areas of life. Daily you have to
make financial decisions on which items to spend your money. You
are in effect the managing director of your family's business.
Spend more than you get in, your company (business) will soon go
broke. Consequently, you have to ensure that you live within
your means and balance the household books (weekly or monthly
depending on pay-day)... otherwise you will get into financial
difficulties.
The more money you are able to save each week or month, the
higher will be your ultimate standard of living; although being
a miser will not bring happiness. You have to strike a balance
in your life between saving and enjoyment (= spending). After
all, who wants to get to a comfortable retirement after a
lifetime of frugality and no memories? We all know that
"
penny-pinchers" and "Scrooges" are often the most unhappy
people in the world and that it's always better to give than to
receive. Is it really, or only for saints?
Your household finances are run just like a business. At the end
of each month, how much of what you earn stays in your own
pocket? You will probably find, like most people, that you are
paying everyone else but yourself: the butcher, baker,
candlestick maker and other accounts, like paying off the car
repairs and windows broken by the kids (happened last week - "Oh
bother!").
Unfortunately we can't do without money. Also, the older we get,
the more we normally need. You get used to a certain standard of
living and comfort, but as you get older you need far more
capital than you thought. We will look at those various life
stages we go through, together with our major financial
responsibilities.
The main areas that affect us over our lives include:
# buying a home # choosing a mortgage bond # medical cover #
children's education # budgeting # planning for lifestyle goals
(e.g.. a new home, car, holiday, business) # replacement of
consumer items, like car, furniture, washing machine #
retirement planning # investment planning # estate planning for
very wealthy people (I don't know if the UK and the USA have
estate duty. NZ has done away with it) # professional services
(such as: legal, financial)
Of these, retirement planning is probably the most important
priority; because we have to spend a significant portion of our
life when we don't have any income coming in.
THE TEN MOST COMMON MISTAKES PEOPLE MAKE IN MANAGING THEIR MONEY:
I believe this is the reason why so many people have a needless
struggle with their finances.
1.poor debt management through excessive borrowing - not being
able to live "within your means". 2. failure to monitor their
financial position. 3. lack of motivation (desire) to take
action. 4. lack of foresight in looking ahead. N.B: 5. failure
to set financial plans for the future. Most people don't plan to
fail, but fail to plan. 6. lack of knowledge. Financial
ignorance can prove expensive. 7. inadequate protection against
unforeseen events (life and general insurance), such as death,
disability and physical losses. 8. procrastination in taking
remedial action. And most importantly, 9. lack of discipline in
saving habits. and
10. poor investments: you either pay too much tax on them or
inflation eats into your return, or both...so that you money
actually goes backwards. Even worse, you could lose all your
money if the company to whom you gave your money goes 'broke'.
KNOWLEDGE:
From the above we can see that some basic financial knowledge
is vital for all people to survive in the financial 'jungle'
that is today's world. Gaining financial knowledge takes time,
effort and discipline. You are the manager of your finances, so
make a PLAN to reach your financial GOALS. Then implement it.
ACTION is the key word. Good luck
Craig Lock
About the author:
Craig Lock For valuable money information to help you make and
save your hard-earned money, get out of debt, learn how to
invest, retire early, and take control of your finances see:
http://www.nzenterprise.com/money/ http://www.novelty-gift.com/
and Craig's money books at
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