10 Basic Rules of Money Management

This financial education article features 10 essential rules for being a financially responsible person.

  1. PLAN YOUR FUTURE – Plan for the future, major purchases and periodic expenses. You will not arrive to “financial freedom” parkway, without a road map to guide you. Follow your plan.
  2. SET FINANCIAL GOALS – Determine short, mid and long range financial goals. Continue to nurture and adjust your goals monthly. Evaluate your shortcomings and celebrate your achievements.
  3. SAVE YOUR MONEY – Save for periodic expenses, such as a car and home maintenance. Save 5%-10% of your net income. Accumulate 3 to 6 months salary in an emergency fund.
  4. KNOW YOUR FINANCIAL SITUATION – Determine monthly living expenses, periodic expenses and monthly debt payments. Compare outgo to monthly net income. Be aware of your total indebtedness.
  5. DEVELOP A REALISTIC BUDGET – Follow your budget as closely as possible. Evaluate your budget. Compare actual expenses to planned expenses.
  6. KEEP A RECORD OF DAILY EXPENDITURES – Be aware of where your money is going. Use a spending diary to assist you in identifying where adjustments need to be made.
  7. DISTINGUISHING THE DIFFERENCE BETWEEN WANTS AND NEEDS – Take care of your needs first. Money should be spent for wants only after needs have been met.
  8. DON’T ALLOW EXPENSES TO EXCEED INCOME- Avoid paying only the minimum on your charge cards. Don’t charge more every month than you are paying to your creditors.
  9. USE CREDIT WISELY- Use credit for safety, convenience and planned purchases. Determine the amount that you can comfortably afford to purchase on credit. Don’t allow your credit payments to exceed 20% of your net income. Avoid borrowing from one creditor to pay another.
  10. PAY YOUR BILLS ON TIME- Maintain a good credit rating. If you are unable to pay your bills as agreed, contact your creditors and explain the situation. Contact Springboard Non-Profit Consumer Credit Management for professional credit and debt advice, and inquire about our credit counseling service.
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