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HOW TO MAXIMISE YOUR HARD-EARNED MONEY
by Craig Lock
"Whatever you have, spend less."
- Samuel Johnson.
Every day we make decisions about money that have an effect on
our standard of living. Sometimes they are only small ones. Each day,
you have to make financial decisions about how to spend your
money. You are in effect the managing director of your family's
business. Spend more than you get in, your business will soon go
broke. Consequently, you have to ensure that you live within your
means and balance the household books (weekly or monthly
depending on pay-day) - otherwise you will get into financial difficulties.
The more money you are able to save each week or month, the higher
will be your ultimate standard of living, although being a miser will not
bring happiness. You have to strike a balance in your life between
saving and spending. After all, who wants to get to a comfortable
retirement after a lifetime of frugality and no memories? We all know
that "penny-pinchers" and "Scrooges" are often the most unhappy
people in the world and that it's always better to give than to receive.
Is it really, or only for saints?
Your household finances are run just like a business. At the end
of each month, how much of what you earn stays in your own
pocket? You will probably find, like most people, that you are paying
everyone else but yourself: the butcher, baker, candlestick maker
and other accounts, like paying off the car repairs and windows
broken by the kids (happened last week - "Oh bother!").
Unfortunately we can't do without money. Also, the older we get,
the more we normally need. You get used to a certain standard of
living and comfort, but as you get older you need far more capital
than you thought. We will look at those various life stages we go
through, together with our major financial responsibilities.
The main areas that affect us over our lives include:
# buying a home
# choosing a mortgage bond
# medical coverage
# children's education
# budgeting
# planning for lifestyle goals (e.g.. a new home, car, holiday,
business)
# replacement of consumer items, like car, furniture, washing
machine
# retirement planning
# investment planning
# estate planning for very wealthy people (because of estate taxes)
# professional services (such as legal, financial)
Of these, retirement planning is probably the most important
priority, because we may have a significant portion of our life
when we don't have any income coming in.
THE TEN MOST COMMON MISTAKES PEOPLE MAKE IN MANAGING
THEIR MONEY:
I believe this is the reason why so many people have a needless
struggle with their finances.
1. Poor debt management through excessive borrowing - not being
able to live "within your means"
2. Failure to monitor their financial position
3. Lack of motivation (desire) to take action
4. Lack of foresight in looking ahead
5. Failure to set financial plans for the future
6. Lack of knowledge - financial ignorance can prove expensive
7. Inadequate protection (insurance) against unforeseen events such
as death, disability and physical losses
8. Procrastination in taking remedial action
And most importantly,
9. Lack of discipline in saving habits and
10. Poor investments: you either pay too much tax on them or
inflation eats into your return, or both, so that your money
actually goes backwards. Even worse, you could lose all your money
if the company to whom you gave your money goes broke.
KNOWLEDGE:
From the above we can see that some basic financial knowledge is
vital for all people to survive in the financial "jungle" that is
today's world. Gaining financial knowledge takes time, effort and
discipline. You are the manager of your finances, so make a plan
to reach your financial goals. Then implement it.
ACTION is the key word.
Good PLANNING and good luck.
Craig Lock
http://www.craiglockbooks.com
Reach high, for stars lie hidden in your soul. Dream deep,
for every dream precedes the goal.
...Pamela Vaull Starr
Craig's money books are available
here
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