Wednesday, March 8, 2017

The Need for Money and Money Management

As a society we have become slaves to money and to those who poses it. We are destined to work long hours at jobs that we may or may not like just to keep up with the pile of bills. Not only that business' have learned by using some psychology how to manipulating us into thinking that we must buy or use their products.

Now spending our hard earned money is not a bad thing. That is why we slave at our jobs away from our homes and families for. Where the issue lies in when we start replacing our needs with our wants. When we make our wants into our needs.

It is just fine to want to have things that make us happy. It is OK to buy that new car, big house and the best TV that money can buy. The challenge is to buy these things without them becoming a burden financially on us or our families. So how do we go about making purchases without the burdens? I feel that there are two steps in this process. First, we must understand what we have financially and how much extra we have after our needs are taken care of. Secondly, we must use only our excess funds for the purchase of our frivolous. 

Now you might agree with me that the best of the best TV's is a expense that falls under the wants and not the needs, but certainly the car and the house are needs. We all need to have a car to get us to the job so that we can earn more money and we need the house for our families to live in. These are facts that I am not denying. What I am looking at are cars that cost more than our budgets allow for and houses that surpass the basic needs of keeping our families and possessions safe and sound.

If I asked you to tell me how much you earn and where all of that hard earned paycheck goes could you tell me? Give me a financial statement that outlines how much you earn each payday. Do you know the average amount you make per paycheck. What about your bills. Do you know which bills are due when,? How much balance are you carrying on the credit cards? What is the maximum amount that your card is good for?  Give me a detailed snapshot of your financial profile in one hour. Can you do it?

As for me I have created the financial snapshot and can produce a monthly copy of my finances in about 10 - 15 minutes. Now I am not saying that I have it down to every last penny but I know where my money is and can produce a one page financial report. On this report I have a listing of all of my income, expenses, assets and liabilities. In other words this one page report has everything that I earn, spend, owe and save each and every month. Before you can free yourself from being a slave to money and to finally become a money master you must understand what you have and where it is going. 

What I want to challenge you to do it to write down the following information for last month. Make these four columns on a piece of paper, Income, Expenses, Assets, Liabilities. To the best of your abilities fill this out. You should not be looking for perfection at this point but rather a financial snapshot to the best of your understanding. Don't worry if it is not 100% correct. That will come over time. In order to achieve that perfection you must take the first step by knowing where your money is and where it is going.

As you learn more you might realize that you have miss classified your money, especially when it comes to the assets and liabilities. Take the first step today with the knowledge that you have today. It can be tweaked as you go from financial infancy to becoming a financial master.

One last thing that you might be wondering. Where did I learn all of this? Through lots of research, reading and listing to those who are already masters in this area. The great financial gurus do not hide their secrets from us. In fact they freely, or at least the cost of a book or seminar, give this information to us. The problem is that we are resistant to changing when it comes to our financial health. For most it becomes a topic to avoid rather than something that we talk about with our family and friends. 

Food for though. If you became physically sick would you seek the help of a doctor to help make you better? There are financial professionals out there ready to help you with your financial health.

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