People who may not want to tax their brains with continuing education will often enjoy thinking about money. However, there is a wide gap between thinking - dreaming, longing for, worrying about - and learning how to increase your financial IQ. Everyone can benefit by learning new financial skills and putting them into practice.
There's a lot of help out there, from radio talk shows, investing advisers, online posts and blogs, how-to-get-rich books, and helpful friends and family. Some reliable sources are very old, like the Bible. Others may be hot off the press, promising a brand-new way to get more money, spend it more wisely, make it work for you, and make it last as long as you (and maybe your heirs) need it.
The first step is, of course, to have some money to manage. People who live paycheck to paycheck, spending their income as fast as they get it, are not in a management position. There are some basic tools to help with this situation, as well as tried and true advice.
Making a budget is something that most people resist. Often it is simply because the thrill of spending money as fast as it's made is hard to resist. Sometimes people think the process is difficult. Budgeting is simply balancing income with outgo, while breaking finances down into categories. Having a budget - and sticking to it - is the foundation of financial wisdom.
It's surprising how many people have no idea where their money goes. They get it at set intervals, and it seems to vanish into thin air. Most people can detail fixed expenses like rent or mortgage payments, utility bills, and child support. They may not know the total of such recurring payments, however, or know what percentage each category consumes. They also may not know if their expenses are reasonable - in keeping with conventional wisdom - or way out of line.
Confusion is usually far worse in the area of 'discretionary spending'. Sometimes income is gone the same day it's received. Your goal should be to know where the money is going and then allocate it in advance, so impulse spending doesn't deplete funds that should go to things like clothing, recreation, or savings.
Anything left over should go first into an emergency saving fund. Although each deposit does not need to be large, the discipline of making regular deposits is important. As the fund grows, things that come up can be paid with cash rather than using credit cards - the ultimate defeat. Rich people never buy on credit (the smart ones). They may use credit for investments, but they buy day to day things with cash. Poor people who don't have a plan can't afford to pay cash, so they buy on credit and pay more for everything they get. Then they have another monthly bill and another financial headache.
Budgeting and saving are at the most elementary level of financial matters. There is a lot more to learning about money. There are tax shelters, investments, and many more ways to create wealth. It's fortunate that the more you learn - always assuming you apply the knowledge - the more fun it gets. Setting goals is another way to foster self-discipline and track achievements; setting a goal, meeting it, and setting another higher one is one of life's quiet thrills. Eventually you will find that you're out of the 'investing for dummies' class and headed for a graduate degree in money management.
There's a lot of help out there, from radio talk shows, investing advisers, online posts and blogs, how-to-get-rich books, and helpful friends and family. Some reliable sources are very old, like the Bible. Others may be hot off the press, promising a brand-new way to get more money, spend it more wisely, make it work for you, and make it last as long as you (and maybe your heirs) need it.
The first step is, of course, to have some money to manage. People who live paycheck to paycheck, spending their income as fast as they get it, are not in a management position. There are some basic tools to help with this situation, as well as tried and true advice.
Making a budget is something that most people resist. Often it is simply because the thrill of spending money as fast as it's made is hard to resist. Sometimes people think the process is difficult. Budgeting is simply balancing income with outgo, while breaking finances down into categories. Having a budget - and sticking to it - is the foundation of financial wisdom.
It's surprising how many people have no idea where their money goes. They get it at set intervals, and it seems to vanish into thin air. Most people can detail fixed expenses like rent or mortgage payments, utility bills, and child support. They may not know the total of such recurring payments, however, or know what percentage each category consumes. They also may not know if their expenses are reasonable - in keeping with conventional wisdom - or way out of line.
Confusion is usually far worse in the area of 'discretionary spending'. Sometimes income is gone the same day it's received. Your goal should be to know where the money is going and then allocate it in advance, so impulse spending doesn't deplete funds that should go to things like clothing, recreation, or savings.
Anything left over should go first into an emergency saving fund. Although each deposit does not need to be large, the discipline of making regular deposits is important. As the fund grows, things that come up can be paid with cash rather than using credit cards - the ultimate defeat. Rich people never buy on credit (the smart ones). They may use credit for investments, but they buy day to day things with cash. Poor people who don't have a plan can't afford to pay cash, so they buy on credit and pay more for everything they get. Then they have another monthly bill and another financial headache.
Budgeting and saving are at the most elementary level of financial matters. There is a lot more to learning about money. There are tax shelters, investments, and many more ways to create wealth. It's fortunate that the more you learn - always assuming you apply the knowledge - the more fun it gets. Setting goals is another way to foster self-discipline and track achievements; setting a goal, meeting it, and setting another higher one is one of life's quiet thrills. Eventually you will find that you're out of the 'investing for dummies' class and headed for a graduate degree in money management.
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