FIRST RULE.

PAY YOURSELF FIRST. This is the first rule in personal finance. In preparing your spending plan, make savings an expense category, with a set amount that you pay to yourself monthly when you pay your bills. Don’t plan your savings around what’s left over when you paid everything else. Chances are, there won’t be anything there.

If you are in your twenties or thirties, give yourself the biggest gift you can by paying yourself first with every salary. Treat yourself to secure a retirement – one where you’ll be able to afford to buy yourself someday. 


This is the one thing you can do right now. The most painless way to do that is to make it automatic: deposit an amount directly to your account right after you received your salary then get busy with your other bills and you wont even see the money you're putting away. Out of sight, out of mind, IT WORKS!

THE SPENDING PLAN

In other words – BUDGET. Some thinks that they can reach their financial goals without a spending plan. These are the ones who are most likely disappointed. Creating a spending plan is the most basic step anyone can take towards making their money work, regardless of how high or low is their income a month.

Many of us don’t really realize that we are spending more than what we earn until we are deeply in debt. Spending without knowing how much money we have would cause a major problem.We should decide earlier on how we put our money into use instead of wasting it unconsciously. Without a spending plan, we are letting our money to control us instead of us controlling our money.                                                      

Budgeting and tracking our expense shows us where our money goes and make us see how our expenditures go up over time. We must track our expenditures so we can make conscious decisions about how to spend or invest our money. This is the difference between never having enough money and being able to afford the things that are really important to you like paying off a credit card, saving for a house or buying a brand new car. 

Another side benefit of budgeting is that it can improve your relationship with your spouse or partner. Money matters are the single largest cause of marital breakdown so budgeting, financial goals and working together toward those goals can have positive effect on your relationship.

THE NET WORTH STATEMENT

Your net worth is the difference between all the things of value that you own and all the debts you awe or in financial terms it is your assets minus your liabilities. When calculating your net worth each item should be in their fair market value.

The net worth statement gives you a snapshot of your financial condition at this moment in time. This will tell you whether you owe more than you own or vice versa. Exercise this once a year. Use it as a starting point, a baseline against which to measure future progress and as a tool to identify your weaknesses then seek solutions. If you find that your liabilities are greater than your assets then it is time to put yourself on a diet

SETTING UP YOUR FINANCIAL GOALS.

Save up for anything particular. Start by asking yourself, “What is important to me? List down everything that matters to you and then organize it in order of priority.

Make a list of everything like owning a home, having a family, buy a car, and donate in a foundation for the homeless. Establishing goals and priorities will help make those lists easier. Once you’ve committed to going for one of your goals, you’re spending and saving choices will become automatic.

There are three types of goals:

A SHORT TERM GOAL is something you want to do within the next year. It might be paying off a credit card balance or saving up money so you can pay cash for your holiday gifts this year, instead of charging everything. Maybe you want to splurge on a brand new cell phone or a digital camera.

A MIDTERM GOAL is something with three to five year time horizon. Buying a new car, saving for a trip, or having a particular amount on your savings account.

A LONG TERM GOAL covers a major expense such as buying a house and lot, education for the kids, and your own financial security in retirement. Buying a home should be on top of your list.

LET'S GET IT STARTED

An average high school graduate lacks fundamental money management skills and basic understanding of earning, spending and saving money. These are not taught in our schools and parents aren’t teaching these to their children as well. That leaves it up to you to teach yourself about personal finance principles if you don’t want to stumble through your life by trial and error

Your twenties are the best time to develop good personal finance behavior before you get into debt that you have to pay off or make other financial failures that you’d spend years recovering from. Thirties is still not too late to turn your financial life around if you’re walking on the wrong path.

Controlling your money is way better than letting your money control you. Watch your investments grow and feel how rewarding it is to see your financial goals and dreams becoming a reality.