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This is the first post in a series, covering the steps and stops along the continuum 'Making money, Tracking money, Saving money.....Creating wealth'
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It is a well kept secret that basic money management skills are essential if you want to achieve any of your financial goals.
These skill must become ‘habits’ – something you use naturally, consistently and systematically. Like you brush your teeth in the morning. No exception, no excuse.
The list below may look ‘basic’ – and these skills or habits are, indeed, basic.
But in my experience as an individual person, and as a coach, they have to be re-learned and re-absorbed each time we move ‘up’ a grade.
In each successive ‘higher level’, these habits have to be newly embraced, and applied afresh to the new situation and the new challenges.
If you do not turn these skills into 'habits,' or 'second nature, ' you will NOT be able to meet your higher-level financial goals successfully.
Here are my choices for the Top Ten:
1.Develop and Keep Records of all your assets and all your liabilities (debt).
2.Balance weekly both your checkbook and your account(s)..
3.Check your Expenses/Income ratio, by tracking you daily expenses for a whole month.
Keep a record.
4.Priroritize the expenses you tracked as “HIGH”, “Medium,” and “LOW” priority. Keep a record of that list.
5.If your Expenses exceed your Income, or if you are in debt above Five Thousand Dollars ($5000.-), develop a Repayment Schedule and an Expense Budgeting Plan. The time-duration of the Budgeting Plan depends on the extent of your debt, or on the extent of the gap between your expenses and your income. For each successive Higher Level you go to, raise the sum of money by adding a 0.
6.Budgeting Plan: Reduce your expenses by cutting out lower-order priority expenses, starting with the lowest priority.
You cut out first all “low priority” expenses on a monthly basis. If necessary, you cut out “medium priority” expenses for as long as it is necessary to balance your Income/Expenses ration, and to pay your debt.
6.ALERT: One of your High Priority expenses is paying the Minimum Payment on all Credit Cards. Each Past Due payment gets reported to the credit bureaus, and damages your Credit Rating.
7.Paying down your Credit Card debt, or your other loans, is a High Priority expense. Making substantial payment to bring your debt amount down must come BEFORE any “medium” or “low” priority expenses.
8.If you have substantial credit card debt (your expenses exceed your income), carry only ONE credit card in your wallet.
All other credit cards should be placed in a locked box that you cannot access easily.
9.Do NOT cut out or cancel credit cards indiscriminately.
KEEP your two oldest credit cards, even if they are in the locked box.
The fact that you carry credit cards over a long time adds to your credit score.
10.Become informed about APR – the annual percentage interest rate. .
Check what each credit card is charging you. If you are to cancel any, the Higher interest rate cards should be canceled before the Lower interest rate ones.
Does the thought of practicing any of these habits make you groan ‘boring, b-ooo-o-ring?
Well, get over it.
Consider the fact that in order to build a strong building, a strong foundation must be put in place.
These ten habits are the foundation for your capacity to achieve financial success.
Isn’t it worth it to be bored for a while ?
Let me know how you are doing in implementing these habits!
Dinnah G. Pladott
Copyright 2007 Dinnah G. Pladott, Ph.D.
