Making Prosperity Your Friend

December 3, 2007

Can you imagine asking several hundred people for their advise on money management? It would certainly prove to be interesting to view how everyone would respond. It would not surprise me to learn that the single best advice given repeatedly would be to remember to take a few dollars off the top for yourself. On the onset I could see how some might feel this is kind of cheating the budget, however, that money that you take off the top is what you are investing in a financially independent lifestyle.

It is important to remember that improving your financial outlook is not going to happen overnight. This process is not just about creating a plausible budget nor is it just a matter of being frugal or taking a course on money management. In order to improve your financial future you must also be willing to change your mindset. It is also important to look at how you view and spend money.

Once you have taken an honest look at your view regarding money you then can begin the task of building a budget . Begin with making a list of all expenses (even impulse buys, and vending machines) for the course of at least one month. Once that information is compiled , break the expenses into two categories; one is for fixed expenses, the other flexible expenses. Then add up all of the household income and really examine how the money is being spent. You may be surprised to see the actual dollar amount each month that is being spent on gourmet coffee on the way to work. Once you have identified problem areas in your spending it is time to take steps to improve. Maybe it is a matter of bringing coffee from home in your “to go mug”, or even brown bagging lunch one or two days a week. Obviously not terribly huge sacrifices but after a while you will certainly notice the extra money these little changes make.

Commit to saving money every pay period. Do not wait until you have extra money. The fact of the matter is, if you continue to wait for “extra money” it will simply never materialize. Remember by committing to saving even $2.00 per pay period you are investing in your financial freedom.

Seek out the best way to get the most growth from your money. Ideally, this would involve a some form of account with compound interest, as this will allow for a maximum yield on your investment. If something with compound interest is not readily available then do your homework, research banks, and employ one that has the best interest rates. All the while, continue to seek out venues that offer compound interest as this will allow you to grow your wealth at a faster rate.

Consistency is the key to success, it has been said that habits are formed thru consistency. If you consistently place $5.00 per week into a savings account for a period of six months, you will come to find that this act has become a habit for you. Once you are in the habit of saving a set amount of money every pay period, chances are as your paychecks increase so too will the amount designated for savings.

Always and I stress always use Cash. Stay away from credit cards unless you can pay the balance off immediately. Paying cash allows you to be in control of your finances. There simply will be no surprises to bust the budget at the end of the month. True in this day and age, it is a necessary evil to have a credit card in your name, but as a suggestion, stash the card in a safety deposit box or in a locked cabinet at home only to be used in the event of a real emergency. The goal is to live within your means. Simply put if you do not have the cash readily available then you should not make the purchase. If you decide to throw caution to the wind and make a credit card purchase, keep in mind that you are postponing your goal of a debt free, financial independent lifestyle.

Be ever vigilant when it comes to want versus need. It has been said, do not let want be your master. It seems especially today in an instant gratification world the line between want and need becomes blurred. It is important to realize that our needs as humans are basic, food, shelter, and clothing. Take note that none of those items had designer tags attached. It would be a wonderful world if we could all have the bells and whistles of new electronic gadgets and designer clothes, but that is simply not the case. If you are truly committed to a stable financial future, than you will quickly learn how to decipher a want from a need, once you have mastered that skill, you will find the road to financial security to be much smoother.

Bookmark To: