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How to Maximize Your Hard-Earned Money

By Craig Lock

"Whatever you have, spend less."
 - Samuel Johnson.

Every day we make decisions about money that have an effect on  our standard of living. Sometimes they are only small ones.  You have to make financial decisions about how to spend your money. You are in effect the managing director of your family's business.  Spend more than you get in, your business will soon go broke. Consequently, you have to ensure that you live within your means and balance the  household books (weekly or monthly  depending on pay-day) - otherwise you will get into financial difficulties.

The more money you are able to save each week or month, the higher will be your ultimate standard of living, although being a miser will not  bring happiness.  You have to strike a balance in your life between  saving and spending.  After all, who wants to get to a comfortable  retirement after a lifetime of frugality and no memories? We all know  that "penny-pinchers" and  "Scrooges" are often the most unhappy  people in the world and that it's always better to give than to receive.  Is it really, or only for saints?

Your household finances are run just like a business.  At the end of each month, how much of what you earn stays in your  own  pocket? You will probably find, like most people,  that you are paying everyone else but yourself:  the butcher, baker, candlestick maker and other accounts,  like paying off the car repairs and windows broken by the kids (happened last week - "Oh bother!").

Unfortunately we can't do without money. Also, the older we get, the more we normally need.  You get used to a certain standard of living and comfort,  but as you get older you need far more capital than you thought.  We will look at those various life stages we go through, together with our major financial responsibilities.

The main areas that affect us over our lives include:

# buying a home
# choosing a mortgage bond
# medical coverage
# children's education
# budgeting
# planning for lifestyle goals (e.g.. a new home, car, holiday,
# replacement of consumer items, like car, furniture, washing
# retirement planning
# investment planning
# estate planning for very wealthy people (because of estate taxes)
# professional services (such as legal, financial)

Of these, retirement planning is probably the most important priority, because we may have a significant portion of our life when we don't  have any income coming in.


I believe this is the reason why so many people have a needless struggle with their finances.

 1. Poor debt management through excessive borrowing - not being
   able to live "within your means"
 2. Failure to monitor their financial position
 3. Lack of motivation (desire) to take action
 4. Lack of foresight in looking ahead
 5. Failure to set financial plans for the future
 6. Lack of knowledge - financial ignorance can prove expensive
 7. Inadequate protection (insurance) against unforeseen events such
   as death, disability and physical losses
 8. Procrastination in taking remedial action
   And most importantly,
 9. Lack of discipline in saving habits and
10. Poor investments: you either pay too much tax on them or
  inflation eats into your return, or both, so that your money
  actually goes backwards. Even worse, you could lose all your money
  if the company to whom you gave your money goes broke.


From the above we can see that some basic financial knowledge is vital for all people to survive in the financial "jungle" that is
today's world.  Gaining financial knowledge takes time, effort and discipline.  You are the manager of your finances, so make a plan to reach your financial goals. Then implement it.

ACTION is the key word. Good PLANNING and good luck.

Craig Lock

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Category:  Money

Related Links | BudgetingCreditDebt |
| Identity Theft
| Investing | Retirement |

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