Friday, June 19, 2009

Suggestions on managing personal finances

With the unemployment rate at a 25 year all time high, here are some tips on how to manage your personal finances. I have found this to be useful and thoughts others might too.

[1]Learning to live within your means, however, often requires sacrifice. You’ll need to establish financial priorities (college savings, retirement, money for charitable giving), create a realistic budget, and stick with it. To make budgeting more visual, some financial advisors recommend dividing your monthly income into separate envelopes (or spreadsheets) at the beginning of each month. They should include retirement, mortgage, groceries, gas, utilities, college savings, entertainment, and personal savings.

If the money runs out in any of the envelopes before your next paycheck, you’ll have to borrow from another to make ends meet- most likely entertainment. And if your entertainment fund suffers a shortfall every month? You might have to consider reducing your expenses by purchasing a cheaper car, downsizing your house or giving up some vacation travel.

But look on the bright side: By establishing good spending and saving habits now, you’re not only safeguarding your financial future, but helping to ensure that you won’t have to continue working into your 80s ........ unless you want to.

[1] Physicians Practice January 2009

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