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Some Skills for Good Money Management

Some Skills for Good Money Management

Good manner in money management can help one become self-sufficient and financially secure. To obtain the financial freedom, you should develop a good financial plan to learn how to take control of your finances. Here are some recommended skills for money management and hope you can get some basic ideas to start with.

1. Write down your goals.

Think about your financial goals and write down them on a paper. The goals should be specific through one year, two years or five years. Determine what are exact things you want and a specific date you want it by and the exact cost of the goals.

2. Set up your budget.

You should set up your budget from determining your basic needs including living expenses and debts. Write everything down on a spreadsheet to see clearly all the parts in your financial structure.

3. Develop envelope system.

An envelope system helps you sort your expenses and goals by separating different letter sized envelopes. Starting with the basic living expenses, you should put the money aside each time you get paid into one or two of the envelopes.

4. Cut the unnecessary expenses.

If some expenses are unnecessary, you should stop spending on them and charging up the credit cards. For example, instead of dining out and purchasing morning coffee, make your own meals and coffee at home and pack them with you to your workplace.

5. Set up a stair management system.

The stair management system can help you build confidence in money management by allowing you starting with the easiest task and achieving the goals one by one. For example, you can give 10 percent of your monthly income to charity and 10 percent as your emergency fund. When you have a thousand in your emergency fund, you can start to pay off the debts. The debts can be paid in an order from small to large. Once you have paid off the smallest, move to the next until all debts are paid off. The next step is to save money equaling the living expenses of three to six months as your emergency fund after you have paid off all the debts except the house. When you have three to six months expenses in hand and pay off the house also, you can consider to invest with 15 percent of your income

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