These days, motivational books, journals, magazines and even audio tapes are replete with blueprints on how to make money or profits. People who read and listen to them engage in different business, trades, and ventures with the aim of generating income and profits. But most time, the reverse is the case. The question is, why is it so?
The common experience of business people, especially in the battered economy, has been less profit, capital consumption and fold-up of the businesses. This series, therefore, is designed to expose you to the proven methods of managing money wisely. Money is better than poverty, notes Woody Allen, if only for financial reasons.
The first step to take in managing money wisely is designing a personal spending plan. In achieving this, you need to determine your net worth. By net worth, I mean finding out your over all financial condition. How do you do this? Begin to list your assets. These would include your regular personal income, market value of your possessions which you own and could sell.
The second step is to list your debt: the amount you own to creditors ( bank mortgage, companies, credit cared and the like.
The third step is to subtract your total indebtedness (the total of your debt) from your assets ( the total income including total monetary value of your assets), the difference is your net worth. This forms the summary of your financial condition. If the result of the difference between your total income and the total debts is positive, it means you have a positive net worth. If the result give you a negative, it means you are in debt. If you have a significant amount of debt, you need to have a financial plan or budget that will help you improve your financial picture.
The beauty of having a budget is that, you will be prudent in spending. This financial budget can be weekly, monthly, quarterly and yearly. If by the end of the month you have money left over after all your expenses such ad housing, food, clothing, utilities, transportation, insurance, taxes and recreation, that means you net worth is increasing, and you should have money to save or invest. Franklin D. Roosevelt, a one-time American president, says, “happiness is not in the mere possession of money. It lies in the joy of achievement, the thrill for creative effort.”
If, however, you find it difficult or impossible to meet up your expenses, you need to make adjustments that will help you to cut down your expenses. No matter your financial conditions, diligent and periodic examination of your expenses is important to successfully manage your money.