How to Develop Good Money Management Skills
Money management skills are essential to becoming self-sufficient and financially secure. In order to obtain financial freedom, you must become proactive and learn to take control of your finances by developing a well-thought-out financial plan. Learning how to develop a financial plan will not only help you to develop good money management skills but will also help you to secure your financial future.
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Instructions
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Set financial goals by writing them down on a sheet of paper. Set specific one-year, two-year, and five-year goals. Determine the exact thing that you want, a specific date that you want to have it by, and exactly how much it is going to cost you.
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Determine your basic needs, such as living expenses, and write them down. Write down all of your unsecured debts, such as credit cards.
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Develop an envelope system for your expenses and your goals by writing the name of each expense or goal on a separate letter sized envelope. Set money aside every time you get paid in one or more of the envelopes, starting with your basic living expenses.
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Stop spending money on things you don't need and stop charging up your credit cards. Make your own lunches, for example, instead of eating out.
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Tips & Warnings
Give ten percent of your income, every time you get paid, to charity and set ten percent aside as an emergency fund. Once you have a thousand dollars in your emergency fund, start paying off your debts.
Pay off your smallest debt first. Once that debt is paid off put the money toward the next smallest debt and keep doing this until your debts are paid off.
Save up three to six months worth of living expenses, as your emergency fund, once all of your debts are paid off except your house.
Start investing fifteen percent of your income once you have your three to six months worth of expenses saved and pay off your house.
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Resources
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