WHY DIDN’T THEY TEACH ME THIS IN SCHOOL? (BY CARY SIEGEL)

99 Personal Money Management Principles to Live By

In today’s world, managing your money is more important than ever. You might feel like your wallet has many holes or that your savings aren’t growing as they should. The journey to financial independence can be smoother with the right strategies. This article will explore practical tips and methods to help you take charge of your finances effectively.

You’ll learn about simple saving tips, budgeting methods, investment strategies, and how to maintain a healthy credit score. Each strategy has the potential to positively impact your financial health. Let’s get started on the path to smarter money management.

Quick Tips for Saving Money

1. Start Every January with an Emergency Month: Make January your savings month. After the holiday spending in December, challenge yourself to save as much as possible this month.
2. Look for Discounts: Before making an online purchase, search for discount codes. Just add the product name or brand with the term “discount code” in your search.
3. Buy Previous Models: Instead of buying the latest version of high-ticket items, consider last year’s model. They often work just as well, and you save money.
4. Invest in Maintenance: Some expenses now can save you money later. Regular car maintenance, gym memberships, and annual health check-ups often pay off over time.
5. Avoid Credit Purchases: If you can’t afford something right now, wait until you can. This can prevent high costs from interest, especially on big items.
6. Choose Higher Insurance Deductibles: Set your insurance deductibles high for home, auto, and health. This reduces premium costs while still protecting you against major issues.
7. Skip Extra Insurance Policies: There’s usually no need for additional coverage on items like TVs or watches. You likely have the funds to replace them if needed.
8. Opt for Generic Products: Generic grocery and drug items are often the same quality as brand names, just cheaper. Focus on what you need rather than packaging.
9. Use Cash for Shopping: Decide your spending limit for the day and take that amount in cash. Leave cards at home to avoid overspending.
10. Borrow Books from the Library: Rather than buying books, check them out from a library. The only time to buy is if you need a book for future reference.

Takeaway 2: Creating a Budget

Building a budget is a crucial step in managing your money. It helps you understand where your income goes and allows you to make informed decisions. Here’s a simple way to get started:

1. List Your Income: Begin with what you earn. Write down all sources of income on the left side of a piece of paper. This could include:
   • Salary
   • Bonuses and commissions
   • Dividends and interest
   • Gifts
2. Write Down Your Expenses: On the right side, list your expenses. Estimate your yearly costs and divide that by 12 to get a monthly figure. Prioritize needs like:
   • Housing
   • Utilities
   • Food
   • Insurance payments
3. Pay Yourself First: Always make sure to set aside money for savings before you spend on anything else. This may mean adjusting your lifestyle to keep expenses below income.

Once you’ve completed this, you should ideally notice more income than expenses. If expenses exceed income, you may need to re-evaluate necessary costs.

Tracking Your Spending

Your budget may not turn out as expected. For the next month, keep track of all your expenses. Compare your planned versus actual spending. This will help you identify any areas where you overspend or saved more than anticipated.

Analyzing the Differences

After tracking, analyze how your spending aligns with your priorities. If you notice that you spent too much in one area, consider adjusting your budget for the next month. Be honest with yourself about your choices to ensure you are making progress toward your financial goals.

By following these steps, you take control of your finances and work towards financial independence.

Salary Increase Investment Strategy

Investing a portion of every salary increase can significantly enhance your financial situation. A smart approach is to set aside 50% of any raise you receive. This strategy aligns with the principle of “pay yourself first” and allows you to boost your savings effectively.

Living on your previous salary is essential when you get a pay raise. Many individuals tend to increase their spending in line with their new income, which often leads to financial strain. Instead, keep your expenses at a manageable level, just like when you were in school. This mindset can speed up your journey toward financial independence.

To avoid falling into the trap of living beyond your means, especially right after college, maintain your frugal habits for a few extra years. This discipline can greatly impact your long-term savings and investment potential. By saving and investing wisely, you’ll build a stronger financial foundation for the future.

Takeaway 4: Caring for Your Credit Score

A positive credit score is vital for your financial well-being. It helps you secure a mortgage, gives you better interest rates, makes renting easier, and can even assist in landing a job. Here’s how to keep your credit score in good shape:

• Avoid Using Credit: Try not to buy things on credit. If you must use a credit card, make sure to pay off the full balance each month.
• Keep Balances Low: Don’t use more than 35% of your credit limit. This helps show you are a responsible borrower.
• Automate Payments: Set up automatic payments for regular expenses like rent, utilities, and subscriptions. This prevents missed payments and late fees.

Following these tips can help you enjoy lower costs, gain more opportunities, and have freedom in your financial choices.

Takeaway 5: Selecting a Financially Compatible Partner

Choosing a partner who shares your financial values is crucial for long-term success. Think of it as picking stocks—you want to be careful and make informed decisions. Here are some key points to consider:

• Discuss Financial Goals: Have conversations about your financial goals early on. Are you both saving for a house, retirement, or vacations? Clarity here can prevent misunderstandings later.
• Spend Wisely: Share your approach to spending. If one of you prioritizes saving while the other favors spending, it can lead to conflict.
• Debt Awareness: Be open about any debts. Understanding each other’s financial obligations is important before committing to a long-term relationship.
• Align Values: Ensure your values around money are similar. If one partner believes in frugality while the other prefers a lavish lifestyle, it could create tension.
• Plan Together: Work as a team to develop a financial plan. Establish a budget, discuss savings strategies, and set mutual goals.

By approaching your partnership with the same attention you give to your investments, you can build a strong financial foundation together.

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