Jason Ramsey - How To Manage Your Money Blueprint A Simple Debt Free Guide On Money Management & Financial Independence

How To Manage Your Money Blueprint A Simple Debt Free Guide On Money Management & Financial Independence

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Introduction

P ersonal finance management is gaining an understanding of your finances, so you get to make the most out of your assets in your day-to-day experiences. With personal finance management, you are saddled with the responsibility of analysing every area of your finance, and that entails your income, cash flow, capital, family security, investments, standard of living, assets, savings and daily expenditure.

For personal finance to be managed appropriately, it is essential that you become conversant with the concept of record keeping. The various aspects to be considered above cannot be handled well enough if you dont have a trail of records that tell you exactly how you use money. The management of finance also entails planning.

This process is also all about the importance of observing ones cash flow, income growth and areas of weakness. Personal finance management isnt a one-off process; it is a lifestyle. What we will achieve here is just the beginning so get ready to learn more and increase your knowledge base like never before. You know what personal finance management is, it is time to discover why everyone needs it.

Getting to know about a concept isnt enough reason for you to get involved with it immediately. We are still dealing with the basics of the subject matter, but before we go on to explain further, you need to know why there is a need for personal finance management. Are there benefits when a person becomes conscious of managing finance? If there are benefits, what are they?

Money management is a crucial process for attaining financial success by managing money that includes expenses, investments, budgeting, banking and taxes.

It enables you to know where your money is going and also it helps you plan your budget wisely. Its a fundamental process that determines what you can do and what you cant.

The main ideas of money management are to help you set goals, get organized, track spending, build a budget and saving money. There are rules and tips that will help you for the rest of your life if you apply them and have them in mind.

1. The Basics - Savings

Taking care of your financial life is taking care of your health, your family, and yourself now and in the future when youre old and cannot work to support yourself. If you take care of your finances today you can even help out your children with their future financial needs. Taking care of your finances is a way of saying I love and respect myself, as well as my family. Lets get started. Here is one thing you should to do right away.

Create an Emergency Account immediately with a minimum of three months ideally six months of savings to cover living expenses and pay for emergency items. Why? Because the average time it takes to recuperate from misfortune is approximately one to six months. If you get into a big car accident the recuperation time is roughly one to three months, and surgery takes about three to six months recovery time. A big percentage of peoples average monthly expenses range from $2000 to about $10,000 a month. Lets say that your monthly expenses are $3000 per month multiplied by three months gives you $9000 to use for an emergency. For example, lets say you get into a car accident, the funds can be used as a down payment for your new vehicle as well as paying for a rental car. Other emergencies like your car breaking down or someone trying to sue you are reasons you can use your emergency account. If you are living paycheck to paycheck you are one paycheck away from being homeless. Think about that! One paycheck away from being homeless. So if you have three to six months saved in an emergency account you can pick yourself up from challenges life throws your way and never have to put yourself nor your family in the tough situations of being homeless or begging other people for food or money, or losing your spouse. Yes, you heard me right, losing your spouse. Statistics state that a huge percentage of divorces are due to some sort of financial reason. So if you take care of your finances you can always solve other relationship issues that may arise without money pressures. All relationships have arguments and disagreements but when your finances are in bad shape, you are living paycheck to paycheck, and are constantly working full time; one little argument can sometimes turn into a big argument because of the stress created by not being financially healthy. Now, if you and your spouse are financially in good health and you get into an argument, at least you dont have money stress, and can look at the argument for what it is. This allows you to have a different outlook on the issue, and perhaps a little more patience. Im not saying money can fix all relationship problems; it just takes off some of the pressure. Furthermore, many divorces arise from lack of financial compatibility. Meaning, one person is a financial wreck and the other person in the relationship is good at finances or wants to better his or herself financially. Dont want to spend a lot of time talking about divorce here, however, I believe its very important to include this fact since we are talking about family finances. I didnt mean to derail myself by speaking about divorces, so lets get back to your emergency account. An emergency account is not an option so please start your emergency account today. Many people ask me how much should I start putting in the emergency account? The answer is whatever you can afford, if you can only start with $20 or $30 dollars a month thats a good start. An ideal amount to start with your emergency account should be a minimum of $100 dollars, but if all you can do is $50 start with that. If you can afford to put more money into your emergency account every month, I encourage you to do it. Some people do not have an emergency account simply because they never heard of one, or they dont know why its important to have one. Other people simply dont have an emergency account because they try to live like the Kardashians and attempt to buy things that make them look rich when in fact they are not. When you try to keep up with the Kardashians without having their wealth, you are only getting yourself into a bigger financial hole. To want luxurious things is healthy and good because we live in an abundant universe, however, how you go about acquiring those things is what matters. Im writing a Part Two of the Family Financial Book that covers how to obtain all the luxurious things you want in a healthy and responsible manner. Now, if you are a person that likes to live modestly, thats healthy and good too. Luxury is not what makes you a good person; your values make you a good person. There is a great book called The Millionaire Next Door written by Thomas J. Stanley, Ph.D. and William D. Kano, Ph.D. that illustrates who the real wealthy are in the United States, and how modestly these rich people live. It covers what they buy, the stores where they shop, cars they drive, credit cards they use, and how they live in regular neighborhoods in modest homes. Some people may argue that they dont make enough money or that money is already too tight with what they currently make to save anything. This is how you fix that. Cut down on unnecessary expenses, like dining out, buying things you dont need, or cutting down on your Starbucks visits. A grande size drink at Starbucks is approximately $5 dollars, multiply that times 4 (per month) equals $20 dollars. Thats if you do this once a week, many people go there more than once a week. Other ways of coming up with the money is do some over time at work, get a part time job, sell things on the side temporarily until you fulfill at least your three month goal. Many successful people even save up to one full year of their monthly expenses.