Studying can often be a bore. However, almost everyone likes learning about, talking about, dreaming about, and fussing with money. This makes studying finances more fun than other subjects may be. Researching how to increase your financial IQ can be enjoyable and absorbing.
How-to-get-rich books have been around forever. There seems to be a new one coming out every day. Financial advisers compete for the privilege of guiding your investments. Radio talk show hosts offer free advice to those who phone in. People counsel you to get out of debt, show you how to make pennies go farther, teach you how to make money in the stock market, and show you how to avoid paying taxes.
Assuming you have some money to manage - whether from a paycheck, a government check, or even an allowance - you will need a plan and self-discipline to succeed in getting the upper hand over your finances. People who spend their money as fast as they get it are not in control.
Making a budget is something that most people resist. Often it is simply because the thrill of spending money as fast as it's made is hard to resist. Sometimes people think the process is difficult. Budgeting is simply balancing income with outgo, while breaking finances down into categories. Having a budget - and sticking to it - is the foundation of financial wisdom.
Recurring expenses, or 'fixed' expenses, are things like rent or mortgage payments, car payments, alimony or child support, and utilities. These things can't really be changed. Knowing what percentage of your income goes to this sort of expense is important in understanding the whole picture.
Things not in these categories are areas in which you will have more discretion. Food is something you cannot do without, but you can buy wisely or foolishly. The same thing applies to clothing, recreational spending, and household supplies. Attention paid to detail can mean a bit of money left over after everything is taken care of.
Anything left over should go first into an emergency saving fund. Although each deposit does not need to be large, the discipline of making regular deposits is important. As the fund grows, things that come up can be paid with cash rather than using credit cards - the ultimate defeat. Rich people never buy on credit (the smart ones). They may use credit for investments, but they buy day to day things with cash. Poor people who don't have a plan can't afford to pay cash, so they buy on credit and pay more for everything they get. Then they have another monthly bill and another financial headache.
Budgeting and saving are at the most elementary level of financial matters. There is a lot more to learning about money. There are tax shelters, investments, and many more ways to create wealth. It's fortunate that the more you learn - always assuming you apply the knowledge - the more fun it gets. Setting goals is another way to foster self-discipline and track achievements; setting a goal, meeting it, and setting another higher one is one of life's quiet thrills. Eventually you will find that you're out of the 'investing for dummies' class and headed for a graduate degree in money management.
How-to-get-rich books have been around forever. There seems to be a new one coming out every day. Financial advisers compete for the privilege of guiding your investments. Radio talk show hosts offer free advice to those who phone in. People counsel you to get out of debt, show you how to make pennies go farther, teach you how to make money in the stock market, and show you how to avoid paying taxes.
Assuming you have some money to manage - whether from a paycheck, a government check, or even an allowance - you will need a plan and self-discipline to succeed in getting the upper hand over your finances. People who spend their money as fast as they get it are not in control.
Making a budget is something that most people resist. Often it is simply because the thrill of spending money as fast as it's made is hard to resist. Sometimes people think the process is difficult. Budgeting is simply balancing income with outgo, while breaking finances down into categories. Having a budget - and sticking to it - is the foundation of financial wisdom.
Recurring expenses, or 'fixed' expenses, are things like rent or mortgage payments, car payments, alimony or child support, and utilities. These things can't really be changed. Knowing what percentage of your income goes to this sort of expense is important in understanding the whole picture.
Things not in these categories are areas in which you will have more discretion. Food is something you cannot do without, but you can buy wisely or foolishly. The same thing applies to clothing, recreational spending, and household supplies. Attention paid to detail can mean a bit of money left over after everything is taken care of.
Anything left over should go first into an emergency saving fund. Although each deposit does not need to be large, the discipline of making regular deposits is important. As the fund grows, things that come up can be paid with cash rather than using credit cards - the ultimate defeat. Rich people never buy on credit (the smart ones). They may use credit for investments, but they buy day to day things with cash. Poor people who don't have a plan can't afford to pay cash, so they buy on credit and pay more for everything they get. Then they have another monthly bill and another financial headache.
Budgeting and saving are at the most elementary level of financial matters. There is a lot more to learning about money. There are tax shelters, investments, and many more ways to create wealth. It's fortunate that the more you learn - always assuming you apply the knowledge - the more fun it gets. Setting goals is another way to foster self-discipline and track achievements; setting a goal, meeting it, and setting another higher one is one of life's quiet thrills. Eventually you will find that you're out of the 'investing for dummies' class and headed for a graduate degree in money management.
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