Personal Financial Management- Basics That Can Help You

Today more than ever, it is important to learn the basics of personal financial management. With the costs of nearly everything rising, it is crucial to learn how to set and stick to a budget, pay off debts, and save for the future. There are many small things you can do that will contribute greatly to helping you with your own personal financial management.

The easiest way to do this is by learning how to make the most out of the money you earn. Earning more money will not help you in the end, because you will only end up spending more if you do not learn an effective way to handle your personal financial management. You must learn the difference between what you want and what you need, and how to prioritize them both. It takes self control to live within your means, and to know when you can afford something, and to walk away from it if you cannot. But that is what it takes to make the most of your income.

Your budget should include money set aside for emergencies, expected purchases, living expenses, and bills. Setting a small amount out of each paycheck aside for unexpected emergencies, such as illness or car repairs, will save you from having to possibly pay interest on a loan to take care of your problem. Taking it out of your check allows you to prepare ahead of time, and keeps you from having to come up with a lump sum of money all at once, hopefully, preventing you from incurring more debt.

If you know you need to make a large purchase in the near future, such as a new washing machine, or a new computer, plan ahead, and set aside money for that item from each check as well. Once you have saved enough money, shop around for the best deal. Try to never make a large purchase unless you can do it with cash, to avoid paying high interest and fees.

You should have a pretty good idea of how much money you need to run your household each month. If you can cut back on frivolous things, such as eating out, or renting movies every weekend, you can save that much more money. Try to plan a budget, and set aside the cash you will need for gas, groceries, etc. By knowing what you have to spend, and holding yourself to that amount, you can start cutting out extraneous spending, giving you more income to funnel into other areas.

Your bills should have a high priority with you, it is important to pay them on time to avoid adding penalty charges and fees to your balances, not to mention having the negative report on your credit report. You should figure out how much money you need to cover your monthly bills, and plan accordingly.

If you get a chance to take a job with a higher salary, or to move up within your current company, accept it. The more money you bring home, the more you can funnel into paying off your existing debts, saving you a pretty good chunk of change, especially in credit card interest.

Speaking of credit cards, don’t carry them with you, so you won’t be tempted to use them on things you don’t need and can’t really afford. Save them instead for those things that you have to have, such as tires for your car. Put your cards somewhere in your house in case you do need them, but avoid using them if at all possible. The higher your balance, the longer it will take you to pay it off, due in part to the high interest rates that credit card companies charge consumers.

Learn the value of a sale. When shopping for clothes, groceries, or just about anything, always look for items that are clearance priced. You can save a significant amount of money by being a savvy shopper.

Evaluate your spending habits, and try to cut out some extra expenses, such as magazine subscriptions, extra television channels, extra features on your telephone, etc. You would be surprised how much it would all add up to be in a year’s time.

If you are in over you head, seek profession financial management help. Accountants and financial advisors can help you set up a budget, pay all of your bills, and still save for the future.

Personal Finance: How To Be Smart With Your Money

Group insurance is the most common type of coverage in the United States today. One can usually obtain broader benefits at a lower cost if one is covered as a member of a professional group, a service club or as an employee of a covered company. However, for a slightly higher premium one may join associations
such as Blue-Cross Blue-Shield or Kaiser as a non-group subscriber and receive similar benefits. With both spouses frequently working nowadays, it is not uncommon to find oneself covered under more than one group policy; once as a subscriber and again perhaps as a dependent of a spouse. Group policies
have provisions, however, limiting benefits to 100% of expenses covered so there can be no duplication or windfall for the insured covered under more than one group policy.

Because one’s health is likely to change over a period of time, a consumer should take a good look at renewal provisions when purchasing health insurance. There are three classifications to consider. Renewal at the option of the insurer is the least desirable alternative from the insureds’ point of view. The
insurance company reserves the right to periodically reevaluate the insured in terms of possible deteriorating health and economic conditions in general. The insurer can cancel the policy, raise premiums and insert restrictions as to the future coverage offered.

The second category is the guaranteed renewable policy which prohibits the insurance company from canceling or changing coverage or raising premiums unless the entire class of policy holders is affected. The most lenient renewal provision is the non-cancelable (“non-can”) policy which gives the insurance
company no right to make any changes in the consumers’ coverage or premiums as long as the policy is kept in effect by the offer of timely payments.

Of course the trick when evaluating insurance is to weigh the cost against the privilege. In this case the more lenient the renewal provisions in a particular policy, the higher the premiums will be. However, the higher cost may well be worth it to a consumer who anticipates failing health because of family history or some other reason and therefore does not want to risk being turned down for coverage in future years or having to pay prohibitive premiums for inadequate coverage.

Basic medical coverage is limited as to the benefits provided and has relatively low policy limits in this age of soaring health care costs. Most people find major medical coverage preferable and almost mnecessary. High limits on benefits are possible by using deductibles, coinsurance provisions and inside
limits to bring the premiums within the range of most consumers. Coupled with stop-loss provisions, the risk of catastrophic illness is adequately eliminated. There are many providers of health insurance but group plans are the most popular. The majority of workers receive some such coverage for their families through their employment. Often premiums are paid by their employer as a fringe benefit of the workplace. You should familiarize yourself with the provisions of government policies such as workman’s compensation and Medicare. Make sure you check to see exactly what the renewal provisions are before you buy a particular policy and weigh the benefits to your specific situation against the cost.

Like any insurance policy, money (premium) is paid to the insurer (government) periodically, so that it is available to an employee should he find himself without a job. Like some group health insurance policies, the premium is paid by the employer not the employee (beneficiary) who receives the benefits. The one big difference is that whereas health insurance is an optional fringe benefit provided as a supplement to wages, unemployment insurance is a mandatory
payroll tax in order to fund the program. There are exceptions and modifications to this broad statement.