Money management is important. If you just spend mindlessly, you will probably fall into a lot of trouble and make quite a mess in your life. In order to avoid money problems in your life, you have to plan out your finances. You have to make goals and devise a budgeting plan to help you achieve those goals. This sounds easy enough, but is it quite so simple?
For those without a financial mind or for those who are afraid of even the word financial, money management scares them. It looks and sounds difficult and they can’t imagine themselves successfully doing it on there own. What if I spend too much on a house and I can’t pay my mortgage? What if I cut back so much on my food that I can’t feed my family? What if I choose the wrong investments and lose all my money?
These are all questions that someone who is scared to manage their money may be asking, and there are many more. You could probably think of a few right now. This is no reason not to manage your money. You are not going to mess it up. Sure, money management and financial planning is not fool-proof, but once you get the hang of it, it is not hard. Once you get your goals down and set up a budget, all you have to do is follow it.
You can’t set goals the wrong way. If you have a goal to buy a house in 5 years, you need to come up with a way to afford it. You may decide you need $40,000 for a down-payment. If you save $8,000 a year, or about $670 a month, you can have it. If you invest the money, or put it into a savings account, you will need less, or you will have extra, because your money will earn interest. Even if you didn’t know this and you just stuck it in a bank account that earned interest without realizing it, you would have done anything wrong. You would just be happy to have a bit more money when the time came to buy.
A big part of money planning is budgeting. You need to write down what you will spend your money on and spend only on that. Figure out what you need to save and then work around it. The only way you can mess this up is by not sticking to your budget. The worst way you can plan your money the wrong way is by not planning it at all.