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The ABCs Of Managing Your Money

Posted: Mar 1, 2016 at 2:40 am   /   by   /   comments (0)

The ABC of managing your money are tips from the Bank of America on how to manage your finances successfully.


Personal Finance Tips And Money Management


You don’t have to be a financial genius to manage your money wisely. Just take care of these basics.

Sure, managing your money can get complex at times, but it basically comes down to answering 3 simple questions: A) Where does all my money go? B) How much can I keep? C) What will it take to make the amount of money I keep be more than the amount I spend?

Start by knowing where you are financially—today

First, grab a snapshot of your debts and expenses. Look up what you owe on credit cards, home loans, student loans and other types of debt.

Then, for one solid month, write down every naira you spend out of pocket. Think of it as keeping a personal money-management diary. Instead of your innermost secrets, you’ll be writing down every out-of-pocket expense from new clothes to candy bars.

Also size up your fixed expenses. These include things like rent and car payments.

Then, categorize all your spending. For example, your categories might include groceries, transportation and housing.

Congratulations, you just performed a cost analysis.


Getting down to your personal finance basics


What do you want most, and how much money do you need to get it?

You need to save up for things you’ll buy soon, perhaps a used car or a new fridge. It’s not a bad idea to separate these short-term goals into “must-have” and “wish” lists. If your old fridge is kaput, a new one would be a must-have. That cool new gadget you’ve been eyeing? It probably belongs on your wish list.

You also need to plan for the future: Want to buy a house? Send kids to school? Retire someday?

Write down your longer-term financial goals and put them in order of how important they are to you. Then think about what it would take to actually achieve the goals at the top of your list. Not sure how much your goals might cost?

Add up how much money you’ll need for your top short-term and long-range goals. You just made a capital expenditures projection. (Are you sure you’ve never done this before?)


Take another look at your monthly spending


Go over every category and cut back as much as you can. Remember, every Naira you don’t spend now is another Naira toward the things you want most. Write down your new category-by-category spending totals. Know what? You just built a budget for achieving your financial goals.

(Wait, maybe you are a financial guru.)

Extra credit: Jump-start your savings plan with four more personal finance tips

Put money aside: Set up a savings account and ask your bank to set up automatic savings transfers every month.

Pay yourself first: Use direct deposit to move some of your paycheck straight into savings.

Learn more about how to save for tax-deferred retirement savings

If your workplace offers a 401(k) plan, take advantage of it

Calculate how much you’ll need to save for retirement by using the Merrill Edge retirement calculator