by R. M. Gardner

Created on: May 20, 2008

Tips for managing your Finances Successfully

We live in an era of abundance; there are more choices than our wallets handle. Too much choice and never enough money can make managing our finances somewhat challenging. However with a few fundamental tips most everyone can manage their finances more successfully and afford all of what they need and get a few of the things they want.

1. Know that you control your finances, no one else. As simple as it sounds we often tend to forget this-and society's marketing industry hire some very smart people to help us forget it too. But by examining our own behaviors and controlling our impulses we can gain, or regain, control of our finances. The bottom line, it's your behavior that dictates how financially successful you will be in the long run.

2. Pay yourself first. Before the light bill gets paid, before the rent or mortgage gets paid, before any money leaves your hands you must pay yourself first. It doesn't have to be much $20 a week, $100 month, save it and forget it.

3. Write a budget for whatever money you have left. If you have never sat down and written out your expenses you'd probably be quite surprised at how much money disappears through your fingers without you ever knowing about it. By writing everything down you catch this disposable income and more intelligently decide where it should go. Likewise you can examine living expenses more closely and determine where you stand in your lifestyle. If you're spending more than you're making you're upside down and need to look at trimming some fat. Having a written budget provides you with a visual account of where every penny is going and with this awareness a thought process occurs with every financial decision.

4. Manage your dept. The key component to successfully managing finances is nothing more than controlling how much you spend. Where the first three tips set the ground work, controlled spending is where the real work takes place. You have to distinguish between wants and needs. For example, is having cable TV with every premium channel a want or a need? While you shouldn't have to sacrifice every luxury you do have to balance hard earned cash against the near limitless choice of spending opportunities. This is why credit cards can be so dangerous. Save for what you want instead of buying on credit, it provides a short term goal while using time to temper impulsive behavior. And if you change your mind after a few months of saving, you get to keep the money!

5. Plan for Murphy's Law. If anything can go wrong it willand frequently does. There will always be an emergency, the car will always break down, a pipe will always burstyou get the idea. Remember step two? Having a little cash set aside for emergencies means you're not forced to use that credit card again. So plan for Murphy, he will show up, it's just a matter of when.

6. Always take free money when offered. Sounds to good to be true doesn't it, but if your company offers any type of dollar to dollar matching for a 401K retirement account, and you don't take full advantage you essentially leave free money on the table. The same can be said for Uncle Sam, maximize your contributions into a Roth IRA where money grows tax free and isn't taxed when withdrawn either.

There are any number of other tips out there for successfully managing finances but I find these six provide a good foundation. But consider this one last tip, the golden tip. It's not how much you make and it's not how much you spend; it's what you decide not to buy that determines your long term financial success.

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