Take Control Of Your Finances

Getting your personal finances straight isn’t rocket science: spend wisely, save for the future, invest for the long-term, buy adequate insurance and don’t pile up credit card or other debt.

Many people get the basics wrong. Despite the crisp simplicity of personal finance, they don’t know how to set things right. The reason: Good intentions aren’t enough to overcome a lifetime of bad habits or misinformation.

“Financial balance in life means taking care of yourself now and in the future,” says Dr. John Hoover, author of How to Work for an Idiot: Survive and Thrive Without Killing Your Boss. “Living in economic balance and harmony with yourself is the ultimate wisdom. You can have your cake and eat it, too – if you practice portion control. You can do any uncomfortable thing -- save and invest regularly, clean the garage or basement, work for a moron, whatever -- as long as you focus on the better tomorrow you’re ensuring for yourself and those you love. Don’t let yourself go to seed today; that’s scarcity thinking. But faithfully save a few seeds for the future when you’re still going to want to have fun and feel secure.”

Begin to sort things out by making a list of your attitudes toward money. Then chronicle how you’ve handled money for the last six months. Think back to your childhood and ask: Were your parents spenders or savers? Did they teach you about money? How much freedom did they give you to handle money? Did you save for special things like a new bicycle? Mow lawns to earn money? How does your spouse fit into the equation?

Then recall your college days. Were you always scraping for money? Were financial considerations a factor in deciding your major and in selecting a career? What’s more important when buying a car -- flash or reliability -- and what does that say about you?

Clearly, there are no right or wrong answers. But if you’re honest, you’ll define your attitude toward money and begin to understand its origins. If change is needed, you’ll also see what you’ve got to do.

It’s not easy to alter lifelong habits, but it’s not impossible. Here are five things you can do to take control of your personal finances:

Problem: You spend too much
People may overspend because its gives them a rush, a sense of power or simply because it’s a social activity. Others spend because they’re bored and going to the mall is something to do.

How to Fix It
First, remove temptation by cutting up excess credit cards and closing the accounts. Tear up unsolicited credit card applications and tell the banks to remove your name from the mailing list. Use cash or a debit card for routine expenses. Track your spending and draft a budget. These are good tactics, but the long-term fix will come when you understand why you overspend. Are you trying to wow women, dazzle your co-workers or keep up with the Joneses? Take the time to noodle this one out. When you understand your reason for overspending, you’ll be able to work out a plan to get your finances in order.
 

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