Managing Money: How To Find The Best Strategy For You
Friday, December 30, 2016, 6:00 AM | Leave Comment
When it comes to money management, you should not believe in anyone who talks about secrets or complicated mathematical models.
If you are the type who believes that numbers are absolute science, you could safely abide by the axioms of spending little, earning more and investing early enough so that you can compound all proceeds.
You could even throw in some dollar amounts along with arithmetic operations and you should be good to go, right?
The problem with the aforementioned approach is that it is highly unrealistic; you are better off paying attention to the four strategies listed below:
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Goal Setting and Financial Planning
Every money management strategy should have at least one goal that is specific and reasonable. You also should be able to assign a dollar value to the goal for the purpose of measuring it.
For example: if you feel that $10,000 saved in the bank by 2020 will bring you peace of mind, you should formulate a financial plan to help you reach that balance.
If you start in 2017, you should deposit $277 into a savings or money market account each month; this is reasonable and certainly measurable.
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Retain Financial Professionals
If your liquid net worth is $100,000 or higher, you should strongly consider a professional money management approach.
This amount may not seem like much to you now, but if you are not familiar with asset protection strategies, your liquidity could quickly vanish due to unforeseen events such as lawsuits, accidents or a death in the family.
Many financial institutions such as Home State Bank in Illinois have a trust and wealth management division that can help you hold on to your assets and even make them grow with the right strategy.
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Prepare a Spending and Saving Plan
Setting up a plan that lays out how you intend to spend and save you income for the next 12 months is a standard of financial planning.
To get started with this plan, you should take a hard look at your household spending pattern; you will be surprised at the number of saving ideas you will come up with once you resolve to reduce your spending.
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Always Think About the Worst-Case Scenario
Military and rescue units always plan their operations based on the idea that the worst could happen.
This is something that you must consider when planning your money management strategy, which should always include emergency cash reserves.
If you don’t have emergency cash, make this your priority goal to build it up so that it can cover three months of your life.
In the end, the strategies listed above should give you some ideas about how to establish control of your personal finances. Getting started is not always easy, but you are off to a good start by reading this far.
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Kara Masterson is a freelance writer from West Jordan, Utah. She graduated from the University of Utah and enjoys writing and spending time with her dog, Max.
