Money Management There are times when individuals feel that all of their money goes to paying off debts. We have credit card payments, car payments, and mortgage payments. Having too many debts can sometimes be overwhelming. While some bills are unavoidable, such as mortgage payments, most bills can be avoided by utilizing better money management skills. Poor money management is the third leading cause of debt (Bucci, 2005). Developing a monthly spending plan is one of the most important steps a person can take when managing his or her money.
A monthly spending plan can be useful to track what our expenses are on a monthly basis. In order to track our expenses, we need to write down everything that needs to be paid making sure that we do not forget anything. We then need to evaluate the importance of each expense to see if it is a necessary expense or one we can eliminate. One way to do this is to list those expenses in the order of their importance. One example would be the mortgage on your home. This should be the most important expense on your list.
When making your list you need to make sure to write down how much money is needed for each of the expenses. Your monthly expenses should not exceed your monthly income. An example; if your mortgage payment is more than half of your monthly salary, you would not want the remaining expenses to equal more than the remaining 50% of your salary. People whose expenses are greater than their income can become extremely stressed due to not being able to make ends meet. These same people can also experience anxiety and a sense of hopelessness due to their inability to pay those bills (Scott, 2008).
This is an example of how poor money management can affect people’s lives. Poor money management is also a major cause for people to be constantly late when paying their bills. People who constantly pay their bills late could face a number of negative impacts on their lives. They could face losing their homes, their cars, and possibly their jobs due to poor money management. The problems associated with poor money management can be avoided if the individual took the time to evaluate his financial situation and adopted a budget that would break-down his expenses in relationship to his income.
Individuals with poor money management skills may feel like they are not in control of their lives that often adds to their difficulties and stress. They may feel their lives are out-of-control; they may feel they are not earning enough, or they may feel like they have failed to support their families. Developing a good money management plan and following through with it can help the individual avoid feeling overwhelmed and stressed. Creating a spending plan will often make people feel more in control and less stressed knowing that they are becoming more proactive and less reactive in their lives.
The first thing a person should do is realize that he is not alone and that there are people who can help him. One method is making a monthly budget and sticking to it. A budget will help you realize where your money is going and can show you areas you can cut back on (Fowles, 2010). Following a budget lets you control your money and not the other way around. If a person were to write down every purchase that was made in a day, he or she would be better able to evaluate the necessity of that purchase.
Doing this can help us determine where we are spending our money and where we could be managing our money better. Taking control over our finances may mean saving money and purchasing things with cash instead of using credit. This method helps the individual determine if this purchase is a need or a want. If you find you need more assistance in managing your finances there are consumer credit counseling services that can help you with manage your finances. You will be surprised at how powerful you’ll feel when you are making thoughtful decisions about where and when to spend your money (Bucci, 2005).
Taking control of our money right now is the first step towards a secure future. References Bucci, S. ,(2005, November 1). The top ten causes of debt. Retrived from http://www. bankrate. com/dls/news/debt/debtcreditguide/10-causes1. asp Fowles, D. , (2010). 12 Reasons Budgeting Can Improve Your Life. Retrieved from http://financialplan. about. com/cs/budgeting/a/12ReasonsBudget. htm Scott, E. ,M. S. , (2008, October 17). Financial Stress – How It Affects You and What You Can Do. Retrieved from http://stress. about. com/od/financialstress/a/financialstress. htm