by Roman Y

Created on: May 24, 2010   Last Updated: May 25, 2010

Money cannot buy happiness.  I do not know about that.  At least in America, the supposedly number one capitalist country in the world, money is a very, very big part of happiness.  If you do not have money, you cannot afford basic things such as quality health insurance and education.  Hence earning money and making sure it is dealt with appropriately is a must. 

There are different ways of earning money including employment, investment, etc.  Once you have the money it is imperative that one is smart with it.  Otherwise, I am sure as many of you have heard some times; money can be lost pretty quickly.  So, what are some of the ways to be smart with money?

Establishing financial goals - It is important to set out a few financial objectives that one wants to achieve both short-term as well as long-term.  Some examples of short-term financial needs include a vacation and home renovation.  Long-term goals may include college education for children and retirement.  Once objectives are set, a plan to get to that objective needs to be put in place.

Short-term liquidity - It is important to have some cash or cash instruments stacked away for the 'rainy' day.  Prior to the current economic crisis many suggested having six months worth of cash to be able to pay for rent, basic utility, food and other basic necessities of life.  However given the depth of the current economic crisis, it is more appropriate to have probably about one year worth in savings.

Spend smartly - It is very important to have a budget and follow it.  Yes, we all want a new car, new furniture and a new tech gadget.  And it is possible to get it all.  Just be patient.  Do not buy all things at once.  Spread your purchases across a few months, quarters...  This way not all the money are spent within a month and whatever is not spent is in the savings account (or something similar) earning you more money.

Stay the course - Some may agree that one of the biggest problems we all have is not staying the course of the set path to a certain goal.  Of course some deviations might be necessary as life is not only black and white, however not being able to get back onto that path or not being able to stay the course at all will have negative implications.  The main negative effect is of course being not achieving a set objective.

These are just a few suggestions on how to be smart with money, but of course these are not the only ones.  There are not set rules on how to be smart with money.  Though these suggestions might be helpful, always keep an eye out for other ways to improve your financial situation.

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