FINANCE

“Never confuse the size of your paycheck with the size of your talent.”

— Marlon Brando

Have you ever looked in a mirror and asked yourself: Why am I always broke? Why do I live paycheck to paycheck? Do you realize you are going to be late with the electric bill this month? How can you pay for the new tires you need? If you’ve asked yourself questions like these on a regular basis, you need to take a good look at your finances and how you are managing them.

Spend Less Than You Earn

The first rule in managing your personal finances is to always spend less than you earn. If you are running out of money before your next paycheck, it's time to evaluate your spending. Do you stop for a $5 latte on the way to work each morning? Do you carry a $550 designer handbag with an empty wallet inside? Does a $250 pair of sunglasses make you look fashionable or gullible? Why did you spend hundreds of dollars on a pair of sneakers? Who are you trying to impress? Continuing wasteful spending habits will result in unpaid bills, a lower credit rating, bounced checks, and a lot of fees (more wasted money).

Start Paying Yourself First

Paying yourself translates to putting money in a savings account. No part of your budget is more important than savings. Get yourself in the habit of saving a set amount every payday. Many money managers suggest 10 percent of your income go into savings. Although the interest offered on saving accounts is low, the growth is safe. Your savings account is a great place to put money for a future home purchase and to cover emergency needs when they occur. Savings accounts offer instant overdraft protection for a small transfer fee. If someone gives you a check that bounces, you know your checks won't bounce if you have money in a savings account.

Pay Off Your Bills

Getting out of debt should be your priority. Give up some of the unnecessary expenses and take charge of your finances.

If you have unpaid credit cards, don’t eat out every week or go to the movies. Young millennials are annually spending about $1,200 on cable, close to $3,000 on various forms of entertainment, $500 on alcohol, $2,000 on clothing, $9,000 on transportation, and thousands more on smartphones and other electronic devices.

You don't need every new phone model, but you must pay off that credit card. Everyone can be responsible and cut back on these expenses without being deprived.

Make A Budget

No one can afford to live on borrowed money for long, and that defines credit. It makes more sense to budget your income in a way that helps meet your expenses without using credit. Credit cards should be used sparingly and only when necessary.

Never use a credit card for groceries, lunch, or the movies. Use it only for unexpected expenses that must be paid right away, such as a car repair. Your budget should include your living expenses—mortgage or rent, utilities, heat, groceries, clothing, transportation costs, cable, internet, car payment, credit cards, and any services you use.

The total of your budget must be less than take-home pay. If it isn't, something must be cut from the budget, or the amount dedicated to them reduced. A budget will help you prioritize expenses, control day-today finances, plan for the unexpected, prevent overspending, and save.

Be Responsible In Your Spending

Once you can pay all your bills on time each month, reduced the overall amount of your debt, and have sufficient savings to support yourself for six months without income, you are on the way to financial stability. You can afford to purchase some things now and then as long as you continue saving, paying bills on time, and reducing debt.

When you buy, purchase quality items that will last. Buying "cheap" doesn't always save money. Quite often inexpensive items must be replaced three or four times.

Don't succumb to impulse buying. Stores display a variety of items near check-out for the express purpose of temping you to buy more. They know you may be standing in line for a few minutes and hope you’ll grab a few more items.

Forget The Neighbors

Don't try to keep up with the neighbors. Your responsibility is to your family and creditors. The neighbors may earn more than you do, or may not be as responsible with their money. Your standard of living is determined by your income and needs; the neighbors should never influence your spending habits.

Do what is necessary to get your finances under control. Scrimp, sacrifice, and save. Give up a few pleasures to pay off bills, save faithfully, and be responsible when you spend.

You'll be surprised how fast your savings will accumulate, and soon you’ll be financially sound.