Finances 101

by Dr. Regina Campbell

“Money, like emotions, is something you must control to keep your life on the right track.” Natasha Munson

FinanceMoney is not always the root cause of a person’s problem or challenge. In some cases it is how you view and value money. Like in anything the most important aspect of good sound finances is discipline. You have to discipline yourself in every aspect of your finances especially in the area of saving or spending. In order to save you have to be willing to be a long term thinker. Too many people are short sighted and think that they must buy every time there is a sale not realizing that sales are always going to be a part of the marketing strategy for corporations. Long term thinkers are people that employ delayed gratification in which you realize that you can wait to have certain things. Long term thinkers would rather save up money for a large purchase and then purchase with cash as opposed charging on the credit card and paying the interest. Long term thinkers are those that understand putting a little aside for the purpose of what is called a “rainy day savings.” A rainy day savings is when you have an unexpected bill to arise such as a large appliance goes out in your house. Now if you had a saved for a rainy day then you would take the money from that savings and purchase the large appliance with cash. Now you don’t have to take money from a regular paycheck to pay for the large appliance which could leave you short for other bills. This method avoids going into a steep hole and playing catch up, however the key is to be disciplined.

In addition, another tip for good finances is to have a long term savings into which you only make deposits, no withdrawals. This savings allows you to prepare for large purchases such as a home. When you are purchasing a home it is expected that you have an amount for down payment and it would have to be in an account that has received a large deposit within a 30 days as to question the validity of the transition.

Most important is to live below your means and that is your expenses should be lower than your income as opposed to expenses above your income. Many people’s greatest challenge is spending more than what they make and this can cause some financial challenges. When you are living in this manner credit card usage is high which means that your debt to income ratio will double or triple. I suggest you develop a monthly budget but first track your spending for 1 month (30 consecutive days). To know exactly the amount you spend and where you are spending your money. It is difficult to budget without some knowledge of your spending patterns. When setting a budget determine your financial goals and be committed to following through on your budgetary plan so you can accomplish your goal. As stated before discipline is the key to having good sound finances so you may enjoy financial freedom.

10 Tips for Managing Your Finances:

http://www.patreasury.gov/assets/pdf/Tips-PersonalFinance.pdf