digital divide network - article database

Many people have the wrong notion that if you have huge amounts of money in your bank account, your financial future will be secure. Yes, some extremely wealthy people never run out of money because they can live off with the huge interest their money in the banks has earned. But, the fact that they can live off with just the interest means that they have the discipline to not spend what huge amounts of money they have. People should understand how important it is to live be financially responsible and to do this successfully; you must need to become better at your money management skills. Listed below are some of the tips that will teach you how to manage money wisely.

1. Value what you earn- Money does not grow on trees and it definitely cannot just be found lying around. You work hard in exchange for money; therefore, it should not be much of a surprise that you should learn to value the money that you earn. For you to learn this, you need to get acquainted with how you spend every penny you earn. List down everything you need to spend on and make sure that you prioritize them. Once sorted out, spend your hard earned money in that order. It would be wise to record all your expenses in a journal so you can keep track of where your money is going and so you can determine your spending habits. Learning how to keep track of your spending habits gives you the discipline and the confidence of being financially responsible.

2. Save money. Learning how to save is something you should have learned at a very young age. However, it is still possible if you practice it and have the discipline for it. Remember, your savings should be a fixed percentage of your salary. But if you are struggling to make ends meet, the important thing is to be able to set aside some money, regardless of the amount. Financial experts suggest people to save up to at least 10% of their income, but if you can increase the percentage, the better.

3. Invest your money. Most people overlook the need to invest their money because of fear that they might lose their hard-earned money. However, the risk of losing your money only increases when you lack sufficient financial knowledge. To better understand how investments work, you need to know the 7 levels of investors as stated by Robert Kiyosaki who is an American financial expert.

a. Level 1: People belonging in this category have no money to spend because they live way beyond their means or they spend everything they earn.

b. Level 2: Borrowers are what they call people who fall under this category. These people borrow money so they can cover their financial crises and they invest borrowed money.

c. Level 3: People who save money on a regular basis and store it on a savings or checking account are called savers. They tend to put aside their money for short term savings.

d. Level 4: Investors are people who are aware of the need to invest.

e. Level 5: People in this category are interested in long term investments. They take the time to gain financial knowledge so they can perfectly map out a plan that will let them get control over their spending habits, liabilities and teach them how to live not only within their means but how to increase their means as well.

f. Level 6: Investors at this level have sufficient investment and financial knowledge. They are the ones who can afford risky investments because they have the means.

g. Level 7: People who are at this level are called capitalists because of the level of investment intelligence they have. A capitalist knows how to make money by making use of other people’s money, time and talents.

4. Earn it- Every person needs to understand that there is a need to invest your money in other aspects that will allow you to earn more. With an unpredictable economy, people should find other sources of income. Aside from your job, you can make money by doing what you love.

5. Protect it- Learning how to protect your money is totally different from learning how to earn it. Have the discipline to never touch what you have put away for savings so that you do not put your assets and your family at risk.

6. Share it- Learning how to protect your money is different from being selfish. Therefore, if you want to be financially responsible, learn how to be a responsible payer. Make timely payments, do not falsify tax returns and identify the people around who need it and share it with them.

Having a good set of money management skills will help you secure your financial future. It is important that you do your best in learning these skills so that you can be assured of a comfortable life in the future. The most important thing is to be dedicated in everything financial related, from budgeting to doing a credit score check to investing. Yes, life is full of surprises. Every now and then you will surely experience a financial crisis or a setback, but if you are equipped with these skills, you can be assured of having the capability to overcome them.