Principles of money management

November 11, 12:29 AMHouston Personal Finance ExaminerB. Lynn Williams

Comment Print Email RSS Subscribe

Subscribe

Get alerts when there is a new article from the Houston Personal Finance Examiner. Read Examiner.com's terms of use.

Email Address   Include other special offers from Examiner.com Terms of Use

Principles of money management

stockphoto

Getting your finances in order is not complex, but it is difficult.  Success requires that you embrace the road less traveled. It takes determination, motivation, and education to move from lack to plenty.  The secret to sound finances is there is no secret.  The price of wealth is eternal diligence.  Pay the price and you will reap the reward.  The difference between success and failure is habit.  Take these simple steps to restore peace to your financial life.

Step One: Spend less than you earn.  Our culture promotes "look wealthy" over "be wealthy".   Wealth creation dictates that you keep more money than you spend, but our overwhelming desire for things easily subdues our rational minds.  Force yourself to recognize the difference between your wants and your needs and determine that personal wealth is more important than any want.  When you are tempted to spend unnecessarily, close your eyes and envision handing over the money to the retailer.   See your bank balance decreasing and ask yourself, "Who is getting wealthy, this store or me?"

Step Two: Build an emergency fund.  Savings are at an all-time low.  We are not prepared to cover even the smallest unexpected expenditure.  No emergency fund almost guarantees the use of credit cards and credit card debt is one of the biggest thieves of personal income.  An appliance repair: $200.  An automobile repair: $500.  Not having to use a credit card for unexpected expenses: Priceless.

Step Three: Avoid the use of debt.  We incur debt to achieve instant gratification.  Instant gratification through the use of debt leads to long-term agony. Debt destroys relationships, creates emotional distress, and negatively affects health.  The borrower will always be servant to the lender.

Step Four: Set long-term goals.  Anything worthwhile is worth waiting for.  Compare buying a new house, sending your kids to college, and retiring early with purchasing a new car, buying more clothes, or getting the latest techno gadget and you can easily see why long-term goals are important.  Giving way to short-term desire hampers your ability to achieve long-term goals.