Without considering those who have struck the genetic lottery by being born with a silver spoon, everybody runs into a cash tight situation once in a while. But living with a poor man’s mentality is not going to get you out of your miserable predicament soon. So stop living in the present and think about the future. Your financial problems are only a temporary situation because you can always claw your way out of it in the long term. This taking into account that money will continually flow in from your pay checks and no one can force you to dump them all into shiny things you do not need.
There are really only 2 basic criteria to manage your money.
1) Resist spending on things you don’t need
2) Grow your money with legitimate stable investments
Have you ever walked into the supermarket with a shopping list but end u leaving the place with a car full of items not found on your list? Chances are that you do. And a lot of those items are bought because they were on promotion and just seemed like too good a deal to pass up on. If you look at it this way, the things that you really need are already on your shopping list. Everything else are not really necessary. This is just an example of how easy it is to be tempted to spend on things we do not need. That is the point.
We also often think about investing for huge return instead of sticking to the tried and tested ones that only offer a moderate return. But be mindful that investments promising big returns always come with huge risks. And more often than not, they fail very miserably. If you are not a savvy investor, it is best to stay away from these investments you know little about and go for those that have lesser risks. Imagine having you life savings wiped out from failed investments that you don’t know a lot about. That can be a real heartbreaker.
In spite of what so many money guru masters say about the good associated with complex investment vehicles, you do not have to crack you brain to learn how to make your money work. They are everywhere. Maybe you just have not paid attention to them. Here are some.
The power of compounding interest. This is a concept that has served investors well for decades and even centuries. Warren Buffet is well known to acknowledge this as well. It basically concerns reinvesting the interest you make on an investment back into the investment. Thereby, the real returns you make increases each year. Returns absolutely explode in later years if you keep yourself on this track for a decade or 2.
Credit card rates. One of the most mindless expenses you can incur is the interest charged on your credit card. Essentially every financial institution sells the same product which is money. So it makes absolutely no sense at all to pay more when you can get the exact same item somewhere else for much less. Check out balance transfer available and other cards which have lower interest rates than the one you have right now. There will always be.
On the same line of thought as credit cards, the same goes for savings and current accounts. A lot of people keep an account for convenience even though they know there are better rates elsewhere. Don’t let your hard earned money go to waste this way. Park your cash somewhere with good rates.
401(k). Because this is something available to everyone, gurus often don’t talk about the pros of it and instead focus on the cons. This is so that they can focus their products and weekend workshops on other investments that are lesser known. When it is lesser known, more people will be willing to pay to learn about them. But the fact is that retirement plans are very good places to save your money.
Get educated. The subject of personal finance has been around for decades. Go read up and educate yourself about the ins and outs of managing your money responsibly. There is a wide array of books, audio programs, DVDs, and seminars where you can pick up skills and knowledge on this subject.