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Written by Jimmie Burroughs Email to a friend
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The list of 7 proven techniques on how to manage your money can be a great start for you to build wealth for your retirement or enjoy financial freedom. It is the way that you manage your money that builds wealth, not necessarily how much you make.
I’ve heard people say that if they only had X- amount of money that they would be alright. Never loan a person money who says that to you. In the first place it will not solve their financial problems, and secondly, you are not likely to get your money back and most of all it doesn’t help the person. They will go ahead and be right back in the same predicament in a short time. The following stories are good examples of it:
“Patricia Smith, the former controller of an auto dealership in Pennsylvania, is headed to jail after embezzling $10 million from her former boss in a stunning case of a trusted employee looting the business then squandering the cash on luxuries.
Smith, who worked at Baierl Acura located in Wexford, Pa., an upper-middle class suburb of Pittsburgh, was convicted of systematically stealing for seven years–some $4,000 a day on average–for private jet travel, special trips to the theatre, fancy clothes and other goods, according to the court”. ABC news
“Ronald Page seemingly had it made when Bank of America unintentionally changed his account status, allowing the 55-year-old man to make unlimited ATM cash overdraft withdrawals.
But ABC News reports that Page, who in reality had only $300 in his checking account, used the accidental loophole to withdraw more than $1.5 million—losing it all on gambling.” Page lost the 1.5 million in 6 months.
Many are like Mrs. Smith and Mr. Page. It makes no difference how much money they have at their disposal, they will always come up broke and needing more. Once Again, managing your money builds wealth not necessarily how much you make. It is not at all too uncommon to hear of people, especially entertainers and athletes, who have made millions and wind up flat broke in a short time. And especially that true is for lottery winners. It is because they have never learned the value of money, and how to properly manage it.
Remember that people make money and not the other way around; money doesn’t make people. Floyd Mayweather made 85 million dollars last year, that is 42, 500,000 dollars per hour; he only had to work two hours or two one hour professional fights. He, in my opinion, is not what you would refer to as a refined and caring person. He has the reputation of being a racist and making rude remarks.
It is true that a lot of rich people are refined and caring people who use their money to help worthy causes. But the truth is, that is how they became wealthy in the first place; they were made people who made wealth. Wealth has never made the person. Suddenly becoming wealthy like a lot of crude and uncaring rich people have done, mostly overpaid athletes and hip hop rockers, does nothing toward making a person. The first objective in building wealth is to become a made person, a person of value who values others. The 7 ways to better manage your money below is part of what it means to become a made person:
7 ways to manage your money and build wealth:
1. Budget for saving and giving; budget at least 10% of your take home for saving and 10% for charitable giving.
2. Live below your means.
3. Buy only what you need
4. Budget for entertainment and stay within your budget.
5. Be careful how you spent your pocket change; it mounts up fast.
6. Owe only for your mortgage.
7. Manage your own money and investments; never allow others to do it for you.
Budget for saving and giving; budget at least 10% of your take home for saving and 10% for charitable giving.
Budget your saving and giving first; both are an extremely important part of your budget. Many do not budget them at all because they are not necessary for getting by. Unless you plan to work until you die and never know financial freedom, then they are necessary.
The reason giving is included is that is the way God intended us to live. Giving 10% of the income to help others has been a Bible standard beginning with Father Abraham before the law, and continuing through the New Testament.
Live below your means.
If you don’t have enough money to save, it means you are probably living above your means. If that is your case, you need to downsize to the point where you have at least 20% left over for saving and giving after everything is paid.
There was an interesting story that appeared recently on Yahoo news about a family of four who had lost their home in the recent downturn of the economy. Instead of jumping back in and trying to continue to live above their means, they downsized to a tiny little house around 160 square feet and began to save a lot of money. As time goes by they intend to expand their house and pay cash for it. Sometimes is requires drastic measures to live within your means, but it will pay off in the long run.
Buy only what you need.
The difference between the way the rich spend their money, and poor spend their money is that the rich buy assets, and the poor buy junk that winds up in a garage sale. Train yourself to resist the urge to buy the latest new trendy item; if you can live well without it, don’t buy it. Avoid impulse buying. Make it a habit to wait and give yourself time to think about a purchase before you buy. The sales technique used the most is to get you to buy without thinking, that’s impulsive buying.
Budget for entertainment and stay within your budget.
Entertainment is an important part of living well, but it also can be your financial downfall if you go overboard. By including a certain amount for entertainment in your budget and sticking with it you can still live well but avoid overspending.
Be careful how you spent your pocket change; it mounts up fast.
If you have the habit of dropping by Starbucks and paying $5 for a cup of coffee five days a week, you are spending an extra $80 a month, and that amounts close to $1,000 a year. That could be a sizeable nest egg for retirement if you saved that amount consistently and invested well. There is an old saying that if you if you are careful how you spend your pennies, the dollars will take care of themselves.
Owe only for your home mortgage.
The fact is that many Americans pay 24-34 percent of their income towards interest. By discontinuing the use of credit you can have that 24-34 percent to go towards your saving. The one exception to financing is your home mortgage. It makes sense to finance a home rather than waiting years to save the money, and the interest is still deductable on your income tax. It is also a good investment that will appreciate over time and offset the amount paid in interest.
By saving and paying cash for a used car you can save thousands of dollars over time in interest alone and at the same time free up an extra 4 or 5 hundred a month for saving. Paying cash instead of charging on a credit card can also cause you to better control spending and save a ton of money on interest. Also avoid buying small appliances and electronics on time or a same as cash deal; save and pay cash instead.
Manage your own money and investments; never allow others to do it for you.
Billionaire Oprah still manages her own money and writes her own checks. Many a person has lost all their money by entrusting it to the care of someone else. Be your own financial advisor; learn about investing. Never trust investment brokers or financial advisors who are more concerned about making money for the company and themselves.
I’m not a financial advisor, but the techniques above are ones that are proven to work by my own experience and the experience of others. Learning to manage your own finances is something that is necessary for having an adequate amount of money to experience financial freedom and to retire later in life. Those who rely on Social Security alone will have a difficult time making ends meet. It should never be the objective too save money to the point that it reduces the quality of your life. The point is to have balance, both in the way you live and the way you save. Finally, building a better you begins with a relationship with God.
About the author: Jimmie Burroughs is a motivational speaker and author who has been involved in teaching Christian Personal Development for more than 30 years. There are hundreds of articles to help you on this website, Website Contents , in your person growth. Be sure to take vantage of the FREE offer to get the “Personal Development” eBook while available.
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