10 Basic Rules of Money Management
1. Plan – Plan for the future, major purchases and periodic expenses.
2. Set financial goals – Determine short, mid and long-range financial goals.
3. Know your financial situation – Determine monthly living expenses, periodic expenses and monthly debt payments.
4. Develop a realistic budget – Follow your budget as closely as possible. Evaluate your budget. Compare actual expenses with planned expenses.
5. Don’t allow expenses to exceed income – Avoid paying only the minimum on your charge cards, try to pay more. Don’t charge more every month than you are repaying to your creditors.
6. Saving is good – Save for periodic expenses, such as care and home maintenance. Save 10 to 15 percent of your net income. Accumulate three to six months salary in an emergency fund. Put money away for retirement, by opening a Registered Retirement Savings Plan (RRSP) and take advantage of current income tax rules that allow for other tax-deductible savings.
7. Pay your bills on time – Maintain a good credit rating. If you are unable to pay your bills as agreed, contact your creditors, and explain your situation.
8. Distinguish the difference between needs and wants – Take care of needs first. Money should be spent for wants only after needs have been met.
9. Use credit wisely – Use credit for safety, convenience and planned purchases. Determine the total you can comfortably afford to buy on credit. . Do not borrow from one credit to pay another.
10. Keep a record of daily expenditures – Use a “Monthly Budget Tracker” daily expenses budgeting booklet to assist you in identifying how you spend your money and where any adjustments need to be made.
Material courtesy of Credit Canada Debt Solutions, a non-profit charitable organization.