Money is another asset that requires management. At times people are heard to say, “I just don’t know where the money went.” Usually this indicates that there was no budget, or there was an impractical, incomplete budget, or a failure to stick to a reasonable budget.
If we have a sound family budget, there is one unalterable rule that will keep us out of trouble. Discipline ourselves to live within our means. When spending exceeds income, whether it be on a national or a personal level, the problem quickly compounds itself beyond control, and the result is chaos. Care should be exercised in using credit cards so that a person avoids buying merely what he desires and not what he actually needs. An intelligent adjustment in one’s life-style may be needed for one to be a good manager of finances.
“Save for a rainy day” once was a basic family rule. And it still makes good sense today. For most persons there is no other way to increase one’s assets. And wise investment of savings can offset inflation. For example, if a 22-year-old could save one dollar each day and he arranged to invest it at 10 percent, he would have more than 200,000 dollars at the age of 65.
In good money management, all dormant cash, whether large or small amounts, should be kept working to the best possible advantage. Whether for an individual or for a group, checking accounts bearing little or no interest should hold only funds sufficient for immediate needs. Money that is not needed right away could be put into deposits that produce maximum interest. We do not have to be satisfied with a minimum-return savings accounts. If we care to negotiate, many banks will pay even slightly more than their advertised interest rates.
Some individuals have preferred to put investment funds into areas that generally do not suffer from inflation, such as revenue-producing real estate, or land. Of course, caution and expertise are required in making such investments. But often they yield greater profits than would a savings account. Furthermore, in most places, interest on cash is subject to income tax, whereas gains on capital investments may not be taxed or may be taxed at a lower rate.
In calculating the return on any investment, it is a serious mistake to disregard the amount of tax involved. If the investment is substantial, the advice of an expert may be needed.
The managing of one’s possessions is becoming more and more complex. No single set of guidelines will cover all the problems. But there is wisdom in learning fundamentals and applying them. It is not easy to follow principles of sound management. But the effort made is well worth it, for good management can affect your future and that of your loved ones.
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