There are basic financial management truths that can help anyone regardless of age, gender, culture, income and profession. Understanding them can provide a framework for your financial planning:
1. Know your money personality – everyone has a personality: unique attributes, values, goals, worries, tendencies, likes and dislikes that define their character.
2. Know what you’re saving for and have a plan to get there – defining goals will give you the focus to achieve them faster. Setting a target date for your goals can help you stay motivated along the way.
3. Know your cash flowCash flow The sums of cash a business gets in and spends out during a set period…+ read full definition – knowing how much money you earn and how you spend it is key to managing your money.
4. Shop around to get the best value for your money – whether you’re buying a new television or choosing the right investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition product, take the time to make sure the cost is right for you.
5. Care more about your money than anyone else does – even if you have an advisor or an institution committed to doing their best with your resources, the decisions — and the results — are ultimately your responsibility.
6. Be a saver, not a borrower – borrowing makes sense if it helps you acquire something that boosts your net worthNet worth The value of all your assets, less what you owe.+ read full definition. But over time, paying back debt takes away from your ability to save — even when interest rates are low.
7. Understand when it’s too good to be true – part of the reasons investment scams succeed is because they make appealing promises. Avoid investment scams by being very critical, especially of unsolicited requests for your money.
8. The sooner you start saving, the better off you’ll be — time is money — really. The sooner you start to save and investInvest To use money for the purpose of making more money by making an investment. Often…+ read full definition your money, the faster it will grow.
Your financial needs and priorities can change as your life changes. Review your financial planFinancial plan Your financial plan should cover every aspect of your finances: saving and investing, paying down…+ read full definition regularly, ask lots of questions and get to know all the optionsOptions An investment that gives you the right to buy or sell it at a set…+ read full definition available to you.
