Financial Management Techniques

Learning how to manage your own finances is a critical skill that helps to ensure your financial stability in the future. Whether you are interested in saving for retirement, creating a nest egg or paying down debts, there are positive steps that you can take to streamline the techniques you use to manage your money. No matter how good or bad your current finances are, there is always room for improvement.

It is hard for anyone to begin implementing financial management techniques unless they have concrete goals for their financial future. Determine where you see yourself financially in the next five years, the next ten years and at retirement. You may not have aspirations to be a millionaire, but simple things like saving for a downpayment on a home or calculating what it will take to put your children through college are perfect examples of short and long-term goals. Calculate your income against expenses to get an accurate view of where you need to save and reallocate funds to achieve your goals. Open a specific savings account or investment account to track your savings.

Once you have your goals in place, it will be much easier to take a hard look at where your money is going. By writing down your expenses and categorizing them as "need to have" and "nice to have," you will quickly realize opportunities to save. If your five year plan, for instance, is to buy a house, you may decide that you can sacrifice a few extra meals out per month and place the equivalent funds into your savings account. Be specific in your savings plan. When you take into account your paycheck and your expenses, choose a concrete figure that you need to save. Analyze all your bills for savings opportunities and remember to check different providers for services such as cell phone service, Internet and cable. If you choose a cable bill that is $20 lower than your current plan, for instance, you should allocate that $20 to your savings account.

Now the hardest part - saving. To successfully take control of your finances, you need to think of your savings account as untouchable. Where many people feel temptation is when the savings account starts to grow. Remember the long term goals. Resist the urge to splurge on a vacation or something else that may tempt you when you see the extra zeros in your bank account. Your savings will continue to grow, especially if you set an automatic savings money transfer. The same goes for credit cards. It's tempting to "buy now and pay later," but remember that anything placed on a credit card and not paid right away will accrue interest as well, meaning you are paying more for items than what the price actually was.