Monday, October 09, 2006

10 Tips for Successful Money Management

Money management is something none of us really want to do, but know at some point in time we have to. In order to get on the path to true financial success - managing your money properly is key.

Fulfilling our pledge to enjoy all of the extras in life, now and in the future, depends on our ability to afford the things we want. It's never too soon therefore, to take a good look at our finances, develop a plan, and find all the opportunities to make our money grow through good financial management.

Here are the 10 best rules to financial success and good money management, say the advisors at Alterna Savings:

1. Plan. Assess your needs for the future, major purchases, and periodic expenses.

2. Set Financial Goals. Determine your short, mid- and long-range, wealth-building goals.

3. Know Your Financial Situation. Determine your monthly living expenses, periodic expenses and monthly debt payments.

4. Develop A Realistic Budget. Follow it closely and evaluate it regularly comparing actual expenses with planned expenses.

5. Don't Allow Expenses to Exceed Income. Pay down your credit cards, pay more than the minimum amount, and don't charge more on the card than you are repaying to your creditors.

6. Save. For periodic future expenses, try: 1) Saving 10% to 15% of your net income; 2) Accumulating 3 to 6 months salary in an emergency fund; 3) Putting money in a Registered Retirement Savings Plan (RRSP) or in other tax-deductible plans, such as savings for your child's education (RESP).

7. Pay Bills on Time. To maintain a good credit rating, contact your creditors if you are unable to pay when bills come due. The Ontario Association of Credit counseling Services can link debtors to professional advice if they are overwhelmed with their situation.

8. Distinguish Between Needs and Wants. Take care of needs first.

9. Use Credit Wisely. Know the total you can comfortably afford and keep payments within 15% to 20% of your net income.

10. Keep a Record of Daily Expenditures. Detail how you spend money on a daily basis, so you can adjust your budget as needed.

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