Managing Your Personal Finances

Managing Your Personal Finances

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Most individuals are not proficient at managing personal finances. Although, management an easy task, usually only for some people who have the experience with managing their finances. In contrast, others find it a daunting due to lack of knowledge. Because, the economy have transfigured drastically since the1980’s, and the cost of living, insurance rates, and interest rates on student loans have all increased along with health care having doubled, managing money well has become more difficult. Therefore, it is imperative to acquire the skill of managing one’s personal finances. Through budgeting, saving and advice from a financial planner will ensure any individual financial success and stability.
As an accountant, I know the key to gaining control over personal finances requires a realistic budget be in place. A budget involves several important steps. First, total all sources of monthly income; second, prioritize expenses from most important to least like, mortgage, loans/cost, and automobile, utilities to cell phone and cable expenses. Finally, measure the monthly income versus total amount of expenses. If the monthly expenses are more than income received, this signifies living beyond one’s means. Most people should understand that “Budgeting, either by a formal or informal plan, is a first step in deciding what needs and wants must be meet and what resources are available” (Brown, 2007, p. 316). After all, conquering financial stability gives one the ability to control savings, as well. However, setting a budget is only the beginning of structuring finances. In order to uphold a budget one must stay focused on their needs instead of wants. This focus is often extremely difficult to gain or maintain.
Bad spending habits for long periods make controlling finances complex at times. Compulsive shopping, obsessive credit card shopping, and over spending are all bad spending habits. In contrast, learning from experience, good and bad can be the best teacher. In my mind, the triggers of bad spending habits are due to easy access of cash, misuse of credit card, and compulsive shopper, as well. First of all a person has to identify what influence bad spending habits. Next, analyze ways to correct the problem. Finally, develop a plan to prevent over spending. Recognizing how financial mistakes were easily done will help better understand how to avoid the monetary miscalculations in the future. Most consumers have a savings account for emergencies, like unexpected medicals bills, a change of resident, or decrease in one’s pay.

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Having a “Rainy day” or emergency fund, “This is especially important when it comes to your emergency. It is so easy to write a check that dips into your emergency fund, which will defeat the original purpose” (Ramsey, 2010, p. 13). A person must an emergency place in and, insurance to survive through life emergencies so, correct usage and restraint are critical demands for maintaining an emergency fund, because of unexpected emergencies. A person will also have a peace of mind knowing their funds are in a safe and secure place. Above all, making it a priority to save is essential to one’s future.
Seeking a Financial planner is a smart financial decision for individuals setting long-term goals like, investing, planning retirement or managing one’s finances. A financial defines as a practicing professional that helps create a financial plan for people, covering various aspects of personal finances. For instance, when a person receives a significant amount of money due to a job promotion, retirement, or winning lottery a financial planner can give any person direction on how to manage one’s finances. Still having a financial planner can be expensive in many places, “Most individuals do not have terribly complex financial lives, nor should they need to spend several thousands of dollars to get the financial advice they need” (Bernard, 2013, p. B1 [L]). When choosing a professional to handle one’s finances, In order to find someone that is trustworthy, and one can confide in, shop around before making any final decision. Nevertheless, once a person does become financially successful, there are few better steps in maintaining financial health and stability than investing in the advice of such a financial planner.
Planning, and managing one’s finances are one of the most important skills in life everyone must acquire; due to managing finances has become progressively complex. After all financial planning, saving, and budgeting is a smart decision that will pay off in the future. Saving early in life will be rewarding forthcoming as well.




Effective money management
References
Brown, B. J. (2007). Financial literacy. In B. S. Kaliski (Ed.), Encyclopedia of business and finance (2nd ed., Vol 1, pp. 315-317). Detroit: MacMillan Reference. Retrieved from Gale Virtual Reference Library.
Bernard, T. S. (2013, July 27). A start-up aims to bring financial planning to the masses. New York Times, p. B1 (L). Retrieved from New York Times database.
Ramsey, D. (2010). The Money Answer Book. Nashville, TN: Thomas Nelson. 


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