Learning to Manage Your Personal Finances

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					The ability to manage your personal finance is key for successful long term financial
health and stability. Regardless of how much you earn, being able to make your
income work for you is essential. Not everyone requires a large salary and an
expensive home and car to be happy, but they do need to be comfortable in terms of
being able to eat and sleep in a healthy environment, and provide adequate clothing
and shelter for their families as well. This can only be achieved through sensible
personal financial management, that is, only spending what you can afford, not
borrowing money over and above what you can realistically afford to pay back, and
ensuring you and your family will be comfortable and able to maintain the standard of
living when you retire.
  Banks are often very willing to give credit to customers, which is where you need to
be careful - they are not so easy going when it comes to paying the money back.
Overdraft interest can be very expensive, and you end up paying back much more
than you originally borrowed. On top of that, they charge high prices for going over
the agreed amount, whether by accident or not, so customers need to be extra vigilant
when approaching their limit. On the other hand, when the need is only short term, an
overdraft is a very viable option. If you know in advance one month you will be
caught short, then having an overdraft facility can be a big help. Similarly, simply
setting up and overdraft but not using it until/unless there is an emergency will give
you piece of mind that you will not struggle to suddenly raise any money
unexpectedly.
  Credit cards can be very useful, especially when using them as opposed to debit
cards purely to take advantage of any spending bonus points/offers gained by regular
use - which will only happen if the balance is paid off fully at the end of every month.
Having a credit card for emergencies is again a sensible idea, especially for larger,
unexpected bills such as car repairs. Many credit cards offer a 0% interest on the
balance for a set period, often 6 months, and this can be manipulated so that you
change company every six months to avoid paying any interest. Of course, this just
keeps the interest rate down; it does nothing to shave the amount of what you owe. It
is a common mistake to see credit as an extension of your wages - nothing could be
further from the truth, it is not your money. You will have to pay it back at some point,
and the sooner the better. Therefore, the best advice is again to only borrow what you
can afford to pay back.
  Finally, to secure your future when you eventually settle down and retire, it is an
extremely advisable idea to set up some form of pension scheme, whether that is with
your bank, or your employers. Pension schemes can move from company to company
in the event of job changing, and your employers simply take a percentage of your
wage each month and put it aside, to be given to you in a lump sum as and when you
are retired, so you can maintain a good living standard when you are no longer
working.
  Read about oak bonsai, stages of a relationship and other information at the
Knowledge Galaxy website.

				
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posted:2/23/2011
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