Jeffrey Greer asked:




We have all heard the phrase “money management” before, whether it is in advertisements or on financial education segments in the news. To be honest, many people are not even completely aware of their overall financial picture, much less their ability to acquire good skills.

Money management really does apply to everyone, from minimum wage workers to CEOs of billion dollar conglomerations. Know that effective management skills are applicable to every financial scenario imaginable. It really does not matter how much total money there is to manage; what matters are the basic guiding principles of how you handle that money that you do have.

When you are thinking about your personal financial management style, consider whether you really know what you have as opposed to your debt level. Developing a clear, reasonable budget is a must when planning your financial future. If that thought is scary to you, know that budgeting just takes some common sense; do not spend more than you make.

Speaking of what you owe, most, if not all, money management tips will refer to credit card debt and how to avoid it or at least get a handle on it. Know that this is something that can be a budget buster. A financial management expert knows that credit cards must be used wisely – to build a solid credit file – and never be abused.

Also, the best money management involves a system for savings. You need money right now, but never lose sight of the fact that you are most assuredly going to need some later, too. Good management skills involve this allowance for your financial future. You do not have to save your entire paycheck, but you should be saving at least a little something out of each check.

These skills are therefore an integral component of financial comfort. Be well aware of how much money comes in versus how much you have going out. Achieving financial management and making it a success is going to involve a lot, but never lose sight of your very important goal.

Jorge

Connie Barker asked:




Whether you are in a deep financial hole or would like to get the most out of your money there are some things that you should know to accomplish these goals. Money management can help educate you on the inner workings of money, help you avoid the many financial pitfalls that exist and show you how to make money work hard for you. If you would like to get out of a difficult financial situation and achieve financial serenity, here are some money management tips that are extremely helpful.

In order to truly succeed, you must first understand how money works. This includes learning how to create a budget, save, how to be responsible with credit and how to choose lending products that fit your means and lifestyle.

Create a Budget

Creating a budget can help one understand their unique financial situation. It is extremely easy to create a budget. On one side of the paper, put all of your revenue including your income from your job, and any money you receive from investment, etc. On the other side of the paper list your expenses. Expenses include your mortgage, your car payment, gas, tolls, daily coffee, everything you can think of. If your income exceeds your expenses then you are in a good position to save your extra earnings. If your expenses exceed your income then you are in big trouble and you must cut back your expenses to cover your spending.

Savings

In order to manage your money, you should start building a savings. It is important to pay yourself first once you cash your check. Whether it is $20 per week or $200 per week make sure you save something each month. This savings can be helped later on to invest and make your money work for you.

Be Responsible with Credit Cards

Credit cards are not free money, they are unsecured loans and they can wreak havoc on irresponsible spenders. Many people fall deep in debt by spending carelessly with credit cards. Credit cards should only be used in an emergency or when you have the money to cover your purchase. Credit cards are not as convenient as most people think. In fact, if you pay the minimum payment the credit card company asks of you each month, you may find that an item that cost you $100 really cost over $200 by the time your credit card debt was paid off.

Choose Loans Wisely

Most people require a mortgage or car loan to purchase high priced items. While these lending products have helped millions it is important to choose the right ones that fit your means and lifestyle or else you may find yourself in financial difficulty. Before taking out a loan, do some research and educate yourself on the many types of loans available. Make sure the loan you choose has low risk. For instance, while banks may try to sell you products such as Adjustable Rate Mortgages or Interest Only Mortgages, you may want to stick with the Fixed Rate Mortgage. At least with this mortgage the interest rate will never change and you will know how much each month’s payment will be for the life of the mortgage.

Judy

Lisa McGrimmon asked:




Money management can be a challenge when you’re out of work. If you are going to effectively manage your finances, it will be important to know exactly how much money you have coming into your household and how much is going out. When you experience the reduced income that comes with losing your job, it’s doubly important to track your income and expenses.

If you find yourself in a difficult financial situation, it’s crucial that you fight the urge to put your head in the sand and avoid the issue. Some people hide from their financial realities, never checking credit card or bank account balances because they’re afraid of the truth. That approach only leads to increased debt and financial stress. The only way to be in control of your financial future is to open your eyes wide to your current financial situation.

To start gaining control of your finances you can:

Track everything. Write down the money you have coming from every source of income as well as all of your expenses. Don’t cheat by leaving out a dollar here or there. It can be pretty surprising to see where you actually spend your money. Be realistic about your spending. If money is tight, you’ll aim to be frugal, but also be realistic about how much you need to cover the essentials, and don’t set yourself up for failure. Assess every one of your expenses to see where you can reduce your spending. Just because an expense is fixed, that is, it recurs regularly, doesn’t mean it can’t be eliminated or reduced.

Tracking your income and expenses is absolutely crucial to financial management. It’s the only way to know how much you have, how much you’re spending, whether you’re spending more than you’re making and where you can cut back on expenses.

How to Track Your Income and Expenses

I’m a big fan of using household budget software for tracking income and expenses. Yes, buying the software is a bit of an expense, but it’s a one time expense that, in my opinion, pays for itself in that it helps you to make much smarter financial choices on a regular basis.

I use the software regularly, and I always know on a daily and monthly basis exactly how much I have to spend and where my finances are headed over the long term. Tracking household income also helped me to feel comfortable that everything would be o.k. financially at times when money was scarce. I was able to review all of our past household expenses, find ways of cutting back and determine exactly how much we needed to meet our financial obligations.

I’ve tracked my household budget for so long, I can’t imagine ever being without that kind of information.

When you start using household budget software, it takes a little time to set everything up initially. It’s worth it though, because once you enter all of your financial information, it takes very little time to keep your financial information up to date. You’ll know where your money is going, how much you have to spend on a day to day basis, and where your finances are heading for the long term.

Vernon

Matt S. Saunders asked:




In addition to earning a diploma, learning good financial skills is one of the most important things you can do as a college student. Developing strong money management habits now establishes the groundwork for a solid financial future, as well as provides the foundation you need to achieve your dreams – whether it’s to build your own company, provide for your family, buy a home or travel the world.

According to Forbes.com, today nearly 60 percent of college students graduate with $20,000 or more of debt. It can be difficult to recover financially when you carry this much debt at a young age. It also can translate into serious financial problems in the future. Unfortunately, many Americans reach adulthood without mastering money management, which ultimately can lead to even more serious problems like bankruptcy. In fact, according to the U.S. Administrative Office of the Courts, personal bankruptcies increased 31 percent from 2007 to 2008.

So, what can you do as a college student to set the stage for financial success and avoid graduating with a mountain of debt?

Money Management Tips for College Students

First, make your finances a priority. Then follow these simple money management tips to get started down the path to a brighter tomorrow.

Set clear goals – Goal setting is the first, and most critical, step in the financial planning process. As with any undertaking, if you aren’t sure where you want to go, it’s impossible to determine how to get there. Decide where financially you want to be in one year, five years, and 10 years. Make a list, and be sure your goals are realistic. Important questions to consider include:

How much money will you need to pay for your college education? Include all of your living expenses, not just tuition. How important is it to graduate debt-free? Will you need loans, or a job? What expenses will you have post-graduation? Will you need money to pay student loans, finance graduate school, buy a new car or relocate? What current expenses do you have? Which are discretionary versus necessary ? Do you have a steady income? What are your long-term goals? Would you like to buy a home? Save for retirement?
Establish a plan – Once you’ve selected your goals, it’s time to create your financial plan. This includes developing a budget, as well as evaluating what money management tools can help you achieve your goals the fastest.

Create your budget – Perhaps one of the most difficult tasks when it comes to money management for college students is creating – and sticking to – a budget. If you need help, there are plenty of online resources, which can guide you through the process. If you prefer a more hands-on approach, ask your parents or a professional for advice. As a free service, banks and other financial institutions often have financial advisors who can provide recommendations based on your personal needs, circumstances and goals. Evaluate money management tools – Whether you’re creating an emergency fund, saving for college, retirement, or a down payment on your first home, the sooner you start, the easier it will be to reach your goal. You should evaluate these common items found in a student’s financial toolkit: Student bank accounts – Most banks offer student accounts with low or no minimum balances and fees. In addition to a savings account, you may need a checking account to pay rent, etc. Before switching banks or applying for a new account, consider: Access – Will there be an office or ATM located near campus? Would you like to give your parents access to your account? If so, does the bank provide convenient access for them, too? Fees – Are there any monthly fees? What types of charges can you expect in the event of an overdraft , use of an ATM or a dip below the required minimum daily balance? Will you need to purchase your own checks, or will they be provided free? Perks - Value-added services, like mobile or Internet banking, as well as online bill payment services, can serve students well. When it’s inconvenient to go to the bank, you can manage your finances online, and help protect your credit rating by ensuring your bills are paid on time, etc. Limitations – Are there any limitations on the number of monthly transactions you can have? Does the account or bank have any other restrictions? If so, will you be comfortable with them?

Student credit cards – A credit card be a life-saver when it comes to emergencies, as well as convenient when it comes to financing larger purchases, like books at the beginning of the semester. However, college students often rely on credit cards too heavily, and accumulate unnecessary credit card debt. According to Sallie Mae, today’s typical undergraduate college student holds 4.6 credit cards. In addition, college students are carrying record high balances on their credit cards – nearly one-fourth of students have a total balance ranging from $3,000 to $7,000.

Evaluate your progress - Priorities change, and so do your financial needs and circumstances. Reevaluate your priorities and financial plan on a regular basis — as a college student, once at the beginning and once at the end of each semester should be sufficient. Review your progress, and make adjustments as needed.

When it comes to your personal finances, it pays to do your homework. College is the ideal time to develop solid financial planning and money management skills that will serve you throughout your lifetime. The positive habits you develop today will set the stage for a secure financial future, as well as help make your dreams a reality. Following these money management tips can get you started, and a partner like Fifth Third Bank can help you reach your financial goals even faster.

June

Forest Marie asked:




Money is something that runs our lives. Whether we like it or not, money is a vital piece to our lives. If we do not have any money, we struggle; if we have an abundance of it, we can live our lives vicariously. In order to avoid falling in a bind with money, here are a few money management tips.

The first thing you want to do is make sure to pay all of your bills on time. The first bill you pay late will lead to the next bill, which in turn leads to the next bill. It is easier than you might expect to fall behind and get so far behind that you have nothing to do but curl into a ball. Do whatever you can to pay these bills on time.

The next tip is to read your bank statements regularly. Unfortunately, there are times when people will make charges onto your account without you realizing it. Identity fraud is something we have to be familiar with in our society. In addition to unknown charges, it will also help you become familiar with what you are making purchases of. This can help you cut back on anything that is hurting your account.

Part of unknown charges and paying attention to your account is checking your credit report annually. Having good credit is essential to the finance aspect of your life. You want to keep your credit as clean as possible. But if you do have bad credit, you will be able to work towards repairing it before it is too late if you check your credit report annually.

When money is not an issue, most people spend it willingly and do not take care of it. What you want to do instead is build an emergency fund for you to fall back on in case something goes wrong. You should have an emergency fund of at least three months of living expenses. Then if something goes wrong, you will not be in a complete bind.

The next money management tip is to shop around for the best insurance rates and coverage. Insurance is not cheap, but it can help you out in the future. If you take the time to actually research, you will be amazed at how much insurance companies vary from one another.

Lastly, put together a monthly budget for you to follow. One of the worst things people can do is spend money whenever they want without knowing where it is going. Having a monthly budget will allow you to better manage your money and avoid falling into money problems. And whether we like it or not, money does dominate our society.

Carlos

W. M. Blake asked:




Having children emphasizes the importance of making and caring for money, since you are responsible for other people and their standard of living. The habits that may have worked when you were alone no longer will. Households made up if one or two parents will be able to benefit from the following suggestions.

Take advantage of generic brands whenever possible. They are often the same thing sold by name brand companies. Many children, though, are convinced that the only types of cereal they like are those name brands they’ve gotten acquainted with, so help them get accustomed to their generic counterparts slowly. Using a separate container instead of the cereal’s original packaging to store it could help kids make the switch without even noticing.

Both name brand and generic toiletries can be found at dollar stores for discounted prices. These could include shampoo, detergent, soap, and other common home cleaning supplies. Shopping at such stores before going straight to the grocery store can help save money. Using coupons at the grocery store will be of even more assistance.

Stop using expensive professional cleaning services in favor of doing you cleaning at home instead. For example, using Dryel brand dryer sheets works almost exactly like professional dry cleaning, but is much more cost effective and can be done in a normal home dryer.

Buy a used car. Even though everybody loves driving a new car, getting a well cared for and certified used car will save you lots of money, since cars lose value very quickly. You can ensure that the used car you select hasn’t been through any severe damage before you decide to purchase it.

Find unexpected places to make your clothing purchases. These could be made up of yard sales, thrift stores, consignment shops, and flea markets. You will have to spend more time hunting down real quality garments at these places, but the price you get will be well worth the extra effort you will have put forth. In this way, the entire family can dress great at a great price.

Take money for savings straight out of your paycheck. The best of intentions can fall to the wayside when it comes to savings because things just come up. Automatically depositing a certain amount of your paycheck into a savings account can be of real benefit. This can be done as soon as you have been paid. Banks can work with you to establish the best plan in your situation. For example, individuals who deposit their paycheck every two weeks can set up bank transfers that channel money to their savings account right away.

Saving money requires determination and effort. Sadly, it is never easy. Though taking out some time to get a hold of the family’s financial situation is not easy or pleasant, the entire family (including the kids) is well worth it.

Karen

FindLawThomson asked:

FindLaw provides tips for avoiding debs. URL: www.findlaw.com

Gilbert

Tina Pestalozzi asked:




The more financial knowledge we can help our teens acquire, the better their money management skills will be. From the basic knowledge, such as knowing how to write a check, to the more complex, such as being able to discern between good and not-so-hot credit card terms, our teens need to leave the nest prepared to use their financial knowledge as a useful tool in creating their life. Here are three points to cover with your teen:

Understanding Financial Terms.

A CD is more than just an old-fashion way of listening to music. It’s also a way to save money. Don’t assume your teen knows exactly what different savings instruments are available to them or how they work. Knowing how a traditional savings account differs from a CD or exactly what a money market or mutual fund is, is information they need to know in order to eventually make wise decisions about where to place their money. Be sure they also know the difference between a bank, credit union and brokerage house, as well as between a US Treasury bill, note and bond.

Getting the Right Checking Account.

Eventually your older teen will probably need a checking account and they need to know not to grab the first one they see or just use the bank closest to home. The best checking account is the one that is totally free. (As well as being closest to home!) This may require some leg work and research to find but it is well worth the trouble. Help your teen develop an understanding of how a checking account works and they will naturally be better able to ask the right questions to get the information they need to make a good decision.

For instance, once they understand that a bank is in business to make money, they will be more aware of how the bank intends to get it from the account holders. Is there a minimum balance required to maintain the free status? What is the policy for fund availability? Does the account have overdraft protection, and if so, does that involve an additional fee? There are several things we need to teach about maintaining the checking account; such as how using a ATM or debit card responsibly requires maintaining a few good habits, such as making sure to always enter a withdraw in the check registry and knowing how to successfully avoid surcharges. Also, while it may be an easy exercise to show your teen how to write a check, making sure they understand how to keep and reconcile their checkbook may take a bit more time. Fortunately, most teens are pretty excited about getting their first checking account and are more than willing to learn.

The Credit Card.

It need not be a given that every young adult needs a credit card. Sometimes the need for a card can be put off well into the twenties. However, every teen needs to develop an accurate picture of what behaviors produce what results when using a credit card. Using a card as a way to live beyond one’s means is a sure way to create problems, whereas responsible credit card use might be considered just another way of handling one’s expenses. Knowledge of the credit card game should come long before the actual acquiring of one. Teens need to know that it is not only possible but also desirable to live a debt-free life and that one of the biggest obstacles to that goal is often the credit card. Credit card companies will seek out your teen and your teen needs to be armed with the knowledge to make responsible decisions from the very beginning of their credit history. Be sure to teach your teen the ins and outs of the credit card. Go over what terms and behaviors are favorable and which ones will get them in trouble.

Show them what to look for in an interest rate, that it’s not only about getting the lowest rate, but also one that is calculated on a one month, not two month, balance. Explain to them the different categories interest rates can be calculated on. Don’t assume they know all the nuances of how to use a card and don’t hesitate to find out information that you yourself may be a little fuzzy on. Teaching our teens about money can be a great time for an examination of our own money management skills.

Claude

Timothy Rohrer asked:




Whether you are a seasoned trader or new to FOREX, without a good money management it will be hard to ever make a dime. Good money management will be out a great trading system any day. Without knowing how to keep losses to a minimum will only jeopardize you’re trading efforts even if you have more winning trades than losing trades.

One of the worst mistakes traders make is trading without sufficient capital. This does not mean a trader has to have a lot of money to trade with, but enough to handle the movement in the market. The trader with limited capital will always be a worried trading looking to minimize losses beyond the point of realistic trading.

A good rule to follow is never risk more than 2% to 5% of your FOREX trading capital. Too many traders open mini accounts and begin trading heavily and end up margining out their accounts in a few months, if not a few weeks. Fore example, if a trader opened a mini account for $5,000, they should never trade more than $1 per pip. This way if a trade goes bad, the trader suffers a minimal loss.

Exercising discipline and following a specific trading plan is one of the most important aspects in FOREX trading. Discipline is also the ability to continue to trade your system even after you have suffered a loss. Emotional and revenge trading can easily wipe out entire accounts. Sometimes it’s good practice to ignore the dollar amount in a FOREX account and interpret the number of trades in pips only.

Think backwards when trading the FOREX market. Instead of trying to make money learn how to protect what you already have. If in the event that a trade does not develop in a reasonable amount of time or the market begins to form an opposite setup, you should employ the strategy of cutting your losses short to protect and preserve your capital.

Always use a stop-loss when trading. This will stop your position when the market moves too far against your position. Save your money to trade another day or on another trading setup. Too often traders are convinced of where they believe the market is going and lose their sense of reality and begin to trade on hope. They remove their stop-loss and hope the market will turn around, only to lose more money.

Trade light and never risk too much per trade. When in doubt of a trade, stay out of the market and wait for the trade to come to you. Use a system and follow the system without breaking the rules. Traders who are consistent and follow a definite plan are the ones that make money in the FOREX.

Renee

Kelly Price asked:


Many traders have forex trading systems that can pick the direction of the currency correctly but they continually get stopped out by volatility and cannot stay with the trend. Here are some money management tips to help you stay with the trend and enjoy currency trading success…

A typical scenario which occurs for most traders is they enter a trend with their currency trading signal the price retraces, takes out their stop and then the trend immediately goes back the way they thought, piling up thousands of dollars and their not in!

If this has happened to you, you’re not alone. Most traders have this problem and volatility is the cause.

Of course prices don’t trend in a straight line otherwise currency trading would be easy – they constantly retrace against major trends. Quite simply, you need to employ money management rules to keep you in the major trend and not get stopped out so here are some tips.

1. Don’t Trade the Market Noise

If you want to avoid getting caught by random volatility avoid short term trading strategies such as forex scalping or day trading. All volatility in a day is random. So if you place stops using daily support and resistance you are wasting your time.

Forget day trading and look at long term trend following.

2. Be Selective

You don’t get paid for how often you trade you get paid for being right with your trading signal and getting your market timing right. The big high odds trades don’t come around every day and you need to be patient to wait for them. I know traders who trade less than a dozen times a year, who make triple digit gains and you, can to.

You will also find many of the best trading moves come from breakouts and you need to look for these.

3. Use Breakouts.

Most major trends start from breaks of highs and lows and pick valid ones (check our other articles for more information on breakouts) When a break occurs your stop is obvious below the breakout point. If the breakout continues do not trail your stop to close! This is the major error of most traders in any form of trend and we will discuss this next.

4. Moving Stops

Most traders fail to win because they trail stops too soon. They want to restrict risk so much they create it by bringing their stop within normal volatility and getting bumped out the trade.

Make sure you leave your stop until the trend is well underway and trail outside of random volatility.

A good way of doing this is using the 40 day Moving average as a stop. Sure you miss a bit of the trend when it turns – but you can’t predict that anyway, so there is no point in trying. If you caught 50% of every major trend you would be very rich.

5. Deciding Risk per Trade

Today you can get leverage of 200:1 or more but for a small trader to use all of this is madness.

Sure your gain will be huge – but your stop has to be so close, you are guaranteed to get stopped out. De-leverage and use 10 or 20:1 and risk more per trade.

In forex trading you have to take a risk and you need to be outside of daily volatility with your stop, or you’re going to lose. Risking more to your stop means your chances of winning are higher, if you hit high odds trades and that’s what you need to do.

Volatility can destroy your account quickly, if your forex money management doesn’t handle it.

The above tips will work. In the next series of these articles we will look at how to measure volatility and look at standard deviation of price, which is essential forex education for any trader and a great tool to help time trading signals – the Bollinger Band.

Many traders think forex money management takes care of itself, it doesn’t and you need to get protection for your trades and deal with volatility to win.



Dustin