Basics of Effective Money Management (Education)

There are six basic elements of good money management:

1.  Education
2.  Self-Control
3.  Systemized Budget
4.  Set a Goal
5.  Follow through with the strategies you accept
6.  Support (Emotional and Practical)

These six fundamentals are essential to keeping you on track to managing your money correctly.  Lets start with Education.

The first major component to managing your money correctly is Education.  In school, we learned about History, Economics, Science, Physical Fitness, Mathematics and even Literature, but what happened to Income or Paycheck managment?  Most of our financial education comes from our parents or from neighbours who are willing to share their opinion based on what they have seen on TV or "heard through the grapevine".  When you consider all of the information that we learn in High School and even College, the only real subject that translates into practical use is Mathetmatics.  It's everywhere and in everything.  When your shopping at a department store trying to figure out what 20% off of $175 is or if your trying to figure out how much mileage your really getting to that gallon.  Functional math skills are essential no matter how many of us try to avoid it. Isn't it interesting that math and money are the two things that permeate every part of our lives but yet most people don't have a good grasp of either subject.  This is where Paycheck Distribution Coaching steps in. 

Once you have acquired basic math skills, it's time to move on to realistic and practical knowledge of money and how it really works for you.  We really don't need to go into how to earn an income, that was covered by your parents when you were a child, remember the "get a good education and get a good job" speech?  We have all heard it at one time or another.  Some of us followed it and others went the way of the wealthy, "get a practical, real life education and work for yourself making your money work harder for you".  In either case, there is a paycheck coming in, so how do you manage it correctly?

Managing your money correctly requires practical use of a systemized budget.  But lets start with the basics.  Someone once said "what you focus on expands" so let's get focused on your money and how to make it work harder for you than you have for it.

Here is a little excercise I want you to try:

1.  Calculate your NET income (the amount of actual dollars you have coming in every month after taxes etc)  (if your in a couple and pay the bills together then combine your numbers for this excercise)
2.   6 categories of money use (use last months numbers and get an actual $ amount for each category)
     a.  Everyday needs (rent/mortgage, electricity, food, gas, minimum payments on your debts, insurance
          car payments,etc)
     b.  Entertainment (play time, movies, eating out, concerts, dvd rentals, etc etc, this includes what you
          consider to be not an everday need or expense)
     c.  Education (college tuition, self help seminars, books, etc etc whatever you would consider an
          educational expense)
     d.  Savings ( how much have you put away for a rainy day (monthly))
     e.  Big purchases (are you putting things on credit cards that you can't afford today?)
     f.  Debt reduction (how much extra have you put towards your debt reduction strategy?)

Once you have this done, it will be a real eye opener for most of you.   If you don't really know what your spending your money on, then how can you manage your money efficiently???  

CONGRATULATIONS, you have just been hired for a new part-time job, you are now your own  PERSONAL MONEY MANAGER.  And if you take this job seriously enough, it will pay you more than your full-time job does. Now if you find there are $0 being put into some of these categories, that's ok, I knew there was a reason you were reading this, we will fix that later. 

I welcome your comments and please follow me at www.facebook.com/paycheckdistributioncoach for great daily money management tips.