Читать книгу Family Financial Freedom - Floyd Saunders - Страница 13

Make your Money Work For You

Do you find it difficult to stick to a budget? I know I do, there is always something on sale, or maybe just more month than money. I have always liked this proverb: ”The art is not in making money, but in keeping it.”

Right now you are in your prime spending years, you are working, married with kids to match, and everything is under control, right? Well not if you don’t have a budget that is aligned to your financial goals. The only way to make your money work harder than you do, is to bring it under control, rein in your spending on things you don’t need and create a plan to make your money work.

How Do You Spend Your Money

You may be very careful with your money or you may be carefree the choice is yours. But each choice has a result (perhaps planned, or perhaps unintended).

Once you have identified your net worth, the next step is to look at your income and expenses. It is important to establish where you money is coming from (source of funds) … and where it is going.

There are several things you can be fairly certain of as you plan for your future.

First, you have to deal with the effects of inflation. Inflation erodes your spending power. You can check this out at http://www.inflationdata.com. Over the last ten years, the highest rate of inflation has been 5%. Remember that rule of 72 from chapter one? It can also be used to determine how quickly inflation reduces your spending power. Just use the rate of inflation and divide it into 72 to determine how quickly your spending power is reduced.

Second, you need to know how important it is to distinguish between your wants and your needs. This is a time to consider increasing your income or budgeting out unnecessary spending that eats up your income. Some times it is necessary to defer a purchase, if you don’t need it. Keep you credit cards at home, so you can avoid that impulse to spend when you don’t have cash.

Third, with a budget you can put into place a very important adage ”Pay Yourself First” by setting aside 5 to 15% of your gross earnings every payday for savings and investing. Note I suggest looking at your gross earnings (the money you earn, before deductions), rather than net pay.

Fourth, we all know there are only two ways to improve your financial situation:

 By increasing your income through saving more, working more, increasing the yield on your investments.

 By decreasing your expenses with adjustments your standard of living, spending habits, cutting costs or minimizing your debts.

A budget is simply a plan for how you will disburse your income and earnings. Although virtually everyone operates on an unwritten monthly budget, effective financial planning requires setting down on paper all of your monthly income and expenses. Budget planners are available at a number of online financial planning sites. If you haven’t already look at sites like: Mint.com, qizzle.com, Yodlle Moneycenter or Rainydaybudgt. Take some time and set-up a budget; once you can control you spending, you will be better able to have money to invest for the future.