How to Gain and Keep Control of Your Finances

Tuesday, October 14th, 2008

I found an interesting link through CNN.com. The article lays out a step by step lesson guide to organizing your finances and making sure you keep them that way. In times like this it’s very crucial that everybody understands how to manage their money. I’m going to go over a brief overview of what the website talks about, then I’ll supply you the link so your wonderful inquisitive eyes can go and look for yourselves at the more in depth guide.

First and foremost, before you attempt to handle anything regarding money, you should set your priorities. You need to know what ‘money drains’ are most important. IE: High interest cards & loans, outstanding payments, monthly bills etc. Paying off high interest cards & loans first will make your final payment smaller in the long run. Think about it… sacrifice- give up a little money and bite the bullet to pay more on your principle each month, or pay small amounts for the rest of your life. Seriously. You’ll probably be paying forever. Forever.

Lesson 2: You need to make a budget that keeps you on track for your short and long term goals. Having extra money in your budget and offering yourself some padding will save you from a serious money headache. The kind of headache that is worse than a caffeine headache. It’s the kind of headache that gives you physical pain as well as lingering annoying thoughts filled with dollar signs. Being a student I have a permanent lack of money and am constantly strung out on caffeine. I should know which one hurts more.

Lesson 3: Learn the ins and outs of your banking system and all that it can offer you via services. Nothing is worse than waking up one morning, after not checking your account balance, and realizing you’ve been charged for an overdraw fee. Over and over for a week. Those fees can get hefty- sign up for online banking, and even better! Online bill pay! It will save you time and give you instant gratification when you need to check to see if you have enough cash to grab that yummy mcmuffin or Starbucks on the way to the places you frequent during the morning.

Lesson 4: Learn the basics of investing. Nothing is better than planning for your future, and it’s never too early to start! Understanding stocks, bonds and mutual funds is fun! I swear!

Lesson 5: Invest in some stocks… just make sure you don’t put all your savings into it. That can get nasty real quick.

Lesson 6: Lose all your money in the stock market!…. Just kidding, don’t do that.

Lesson 6 (The real one): Invest in mutual funds and create a nice portfolio.

Lesson 7: Investing in bonds, study them well and understand them.

Lesson 8: Buying a home is an extremely nerve racking investment, but it WILL turn out to be the most rewarding. It is also something you need to walk in to prepared and on your toes.

Lesson 9: Controlling debt. Credit works in funny ways. Sometimes paying off all your credit cards and closing your accounts may SEEM like a good idea, but having revolving credit and open credit cards (when done in a smart fashion) can boost your credit more than closing everything can.

Lesson 10: Employee stock options. Companies will give you stock options, take full advantage!

Lesson 11: Saving for college… need I say more? Putting your child through college, or at least helping them, will put a smile on your face and give them a great opportunity.

Lesson 12: Kids and money… teaching them what you’re learning through these lessons is always a good place to start. Although I’m not too sure how they’ll feel about learning the nifty world of stocks and bonds at age 8.. or while eating ice cream. Time it right or you’ll have a rouge child who spends all your money without thinking twice.

Lesson 13: Planning for retirement. Hard work can pay off if you want it to. Make sure you don’t let your retirement fund just fend for itself.

Lesson 14: Asset allocation. Where to put your money/assets.

Lesson 15: Hiring financial help is a good idea. They can see things that you don’t see and know how to handle other people’s money effectively. I’m going to school for finance. Maybe one day I can do that for you! Just kidding. (Kind of… you can’t hate on the shameless self promotion!).

Lesson 16: Health Insurance. There’s so many different kinds. Some that employers offer, some that are private… some that steal all your money, and some that take close to nothing and help you the most. I also suggest you read into each presidential candidate’s health care plans before you vote. It WILL affect you. (That’s not a threat, I’m just stating the obvious I guess).

Lesson 17: Buying a car! So many options, so little time! Do you want the family friendly minivan, the luxury “pimp” sedan, or the hot off the market little coupe that can get you ladies?! (or gentlemen). This lesson will help you pick through what each car can do for you.

Lesson 18: Taxes. Taxes can make or break you depending on how you deal with them. Tax evasion (accidentally or on purpose) is a bad, BAD way to go. This lesson will clear up everything about taxes just for you.

Lesson 19: Home insurance. Especially if you live in a place where bad weather runs rampant or crime is high. I would have to say it’s necessary for everyone though- it gives you peace of mind.

Lesson 20: Life insurance. You need to think about your family when you plan anything regarding finances. The government and credit card companies are not kind when one passes away and will often times stick the remainder of the debt with the spouse or beneficiary.

Lesson 21: Planning your estate. Many people don’t plan for their estate at all. Here you can learn the steps to do that.

Lesson 22: Auto insurance. It’s something you will probably pay every month/every 6 months for your life as a grown up. Unless you live in the city and take the bus, but I want to write a letter to the city and let them know they should give everyone bodily insurance who spend their day using public transportation…it would be the equivalent to auto insurance except it covers our precious selves when we’re being body checked and injured.

Lesson 23: 401ks. Yes, they are all in jeopardy now with the fluctuating market… but it is the most important tool for your retirement.

I hope you take the time to go to this page- (http://money.cnn.com/magazines/moneymag/money101/index.html ) and read everything under these lessons. They are definite eye openers and will make you feel more confident and stable about your financial future.

I would like to propose a question to everyone reading this and I hope to take the time to leave a comment so I can get some insight. It will help me figure out the direction to gear my upcoming posts. It will also give me the opportunity to check out your blog as well. If nobody responds then you are all subject to my free-roaming thoughts… and that is never a good thing. So my question isssss *drumroll*

I wanted to know which of those lessons you have found most difficult to understand in the past, and what lessons this guide has help clear up for you as well. Any responses are greatly appreciated.

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