To make the most out of this life, resource management is a necessary skill that must be learned if you hope to survive this life. In my life, the one resource I have found to be a challenge is financial management. I have been through the whole spectrum, from poor to rich and back poor again. Throughout this cycle, certain principles are timeless and have taught me to be careful yet loose with finances. I tend to manage my life, household, and finances like a country would. The policies I have in place would make the European Union jealous. This is my method but this is not foolproof. Some strategies may work differently for others depending on the individual circumstances. Read them for what they are, and if necessary, tweak or eliminate them from your plans.
Spend on Paper First
This has saved me from eating at the soup kitchen many times. I have never held a professional job or made a lot of money. The jobs I have worked usually average $650 every two weeks. The things we want and need can easily become blurred, so it is an advantage to see where the money goes before it has a chance to go anywhere physically. If you can predict your paycheck a few days before the actual payday, you’ll be in the driver’s seat and have time to tweak a plan if needed.
Create Budget Categories Immediately
The average person just can’t spend money and hope to survive another two weeks to go on a spending spree. You generally pay for the same services month after month, so go ahead and put them in your fixed expense report. Common themes would be mortgage/rent, auto payments and maintenance, daycare (if you have kids); the list can go on and on. The main point is to try and think ahead about your big ticket expenses so that you won’t be left in the dark literally!
Fund for or Curtail Habits
You know you’re going to buy a carton of cigarettes this pay period, so why not have the expense budgeted? The fallacy with planning on paper is that we are inclined to do right and say we will do away with our bad habits. Once payday gets here however, regular life resumes and you’re off to the store to buy that pack of cigarettes, that six pack of beer, the weed, whatever your vice of choice may be. While it may be true that you need to quit the habit, you also don’t want to go broke by spending in a category you didn’t plan for. Be real with yourself. It will help you as you make those crucial spending decisions.
Strive for Profit
Most personal finance pundits tell you to pay yourself first. That is good advice, but what if you’re barely getting by? Saving $10-15 per check, or even per month, can be daunting. You can do a combination of two things to realize profit. You can cut spending, increase income, or both. If I were really a country that was dripping red ink, the citizens would more than likely revolt right? Well, the same goes for us as individuals, or households if married. The failure to see a profit puts us on a tight margin, and Murphy’s Law is around the corner to derail what margin we thought we had. Do yourself a favor and look for profit. Even if it’s a fraction of total income, if you can break even, that small profit margin will multiply itself in due time.
Invest in Self
Sometimes we need to make a solid investment in order to see the profit we want or need. Do you think you can make it as an actor? Do you know a certain subject and think a blog can prosper both you and countless people? Do you have a business idea that can solve a certain need? If you have any personal goal, it deserves to be funded. Perhaps you cannot fund the goal in full, then break it down and methodically save your way to that goal. At times you will need to invest in yourself in order to gain more control over your situation. The blog you’re thinking about can significantly add to your bottom line if you’re consistent and do things the right way. That acting career could open the doors to other opportunities as well as provide for you. Invest in the income streams you deem worthy.
Are You Wealthy Yet?
After about a month of this strategy, you will at least feel rich. It’s a good feeling not to be pressured or stressed about paying a common bill or where the next tank of gas will come from. I can’t say that I’m personally wealthy, but for someone in my position, I’m doing almost as well as any random professional. This is not to brag, but to demonstrate that anything worth having is worth working for. My last financial campaign took me from a net worth of -$5500 to being worth around $12K. It took four years to get to that point, but the fact is that it can be done. The quota for 2013 is going to be insane!
Do you have anything to add to the strategy? Let them be known and let’s converse about managing resources, money in particular.