Friday, January 26, 2007

Handle Your Finances Wisely

How to Handle Your Finances Wisely:

Below are some words of wisdom to enable you to reap the benefits of money and prevent you from encountering financial troubles.

Secure it. Do not place all your money in your wallet. Instead, avail of the different bank services, for they have different terms suited for the various financial habits of people. If you are confused about where to place your wad of cash, go to the new accounts section of the bank near you. Inquire how you may be able to save your money and earn interest depending on the period that you want. If you are busy, e-banking has even made it convenient to do transactions with a few clicks of a mouse.

Keep track of your financial transactions. If you can afford it and are inept at handling money, find an accountant who will accurately record cash inflow and outflow from your pockets. However, accountants may be expensive to maintain. Because of this, try doing it yourself. Make a list of your receivables and evaluate how rationally you spent them. Also, try making a budget plan. Include allocation for loans payment.

A word on credit cards: Keep track of expenses charged to credit cards. One financial planner advised her clients, “If you cannot pay it in cash, forget about it.” Discipline is required.
While window-shopping, you may find the perfect shoes to match your suit or dress. Without second thought, you may whip out that plastic card and swipe it. Stop! Ask yourself and assess the item.

Do I really need this or do I just want this?

Borrow sparingly. If you can help it, do not borrow. Try to live within what your salary allows you. However, there is a distinction between good and bad debt. Good debt is when you use a loan to purchase something that puts money in your pocket, while bad debt draws out money from your pocket. Examples of good debts include investment instruments, real estate, franchise business, etc. Bad debts are incurred when loans are used to buy doodads like a yacht (that remains unused almost half of the year), electronic gadgets (when you just purchased one 6 months ago), luxury cars, designer clothes, etc.

Observe austerity measures. One way to do this is to recycle things. You do not only help Mother Earth maintain its balance but also keep your financial status safe. Try cutting down on buying clothes if the old ones will do. Do not buy luxury items if you cannot afford them. When shopping, go for classic and timeless pieces. Keep in mind that when handled properly, the things you currently own will last longer. More importantly, they will keep you from constantly buying new ones.

Also, refrain from buying impulsively. Make a list of things to purchase and follow them strictly. Thomas Stanley, in his book “The Millionaire Mind,” noted one particular habit of millionaires. According to his research, millionaires immediately leave department stores as soon as a purchase is made. This helps curb the practice of impulsive buying.

Come up with income-generating schemes. As times become hard to bear for your pockets, it is advisable to think of means to generate money.

For example, it may be the right time to discover your love for cooking, making handicrafts, painting, or baking to earn extra bucks. You may also join bazaars to market your products or organize a garage sale to sell old items.

Financial management boils down to self-discipline. Have the discipline and stick to your budget. Learn to live within your means. As Stanley learned early on while studying wealthy people: You cannot enjoy life if you are addicted to consumption and the use of credit.