Personal Money Management

If a close relative left you $1,800,000 you’d spend a lot of time and pay a great deal of attention to the care and management of the inheritance, wouldn’t you?

Well, this is what you can expect to earn during your working years if you average around $500 a week take-home pay for the first 20 years and about $980 a week take-home pay for the last 25 years until retiring at age 65.

You wouldn’t handle a $1,800,000 inheritance haphazardly, with little or no thought. Why treat the earned income any differently?

Related: Choose Your Retirement Date

It’s easy to pay less attention to one’s earned income because it comes in small amounts at frequent intervals, but add it up over a lifetime of earnings and you come up with a substantial sum.

A Lifetime Job

The job of managing your income will be with you all your life. Some do it well and live smoothly and pleasantly, free from money cares and worries. They enjoy the pleasures and satisfactions of a full life.

Others fumble and stumble from one financial mess to the next. They never seem to solve their personal financial problems. Some families can live comfortable and save on an income of $40,000 a year. Others with incomes of $200,000 can’t make ends meet.

Successful Money Management

If there is one thing people are interested in, it’s the subject of handling money successfully – getting the most value out of each dollar and building family financial security.

Obviously it’s not easy to always do the right thing. Using money effectively is one of the biggest problems in the lifetime experience of any family. In fact, various surveys indicate that the major cause of personal financial problems is bad management of personal finances. Other surveys show that money is the greatest single cause of trouble between spouses.

Related: Treating Your Marriage Like A Business (Financially)

Money Management is a Skill

Personal money management is a skill that can be learned, developed with practice and enjoyed like other skills. Most of us work hard for our money. Surely we will want to take the additional effort to see that it is managed and used wisely.

Learning sound approaches to successful money management will help you and your family achieve financial competence and the kind of financial independence that will contribute to better living.

Include the Whole Family

Make it a family effort. By showing each member of the family just what the financial picture is (in an age appropriate way), everyone will know what’s involved and can pitch-in to help. When children participate they learn some important lessons in planning with money.

Related: Kids and Money

Get Value for your Money

Whether you are single and enjoying your first full-time job, an established wage earner or facing retirement, our lifestyles and goals differ. But all of us share the hope that our hard work will pay off. We can’t foresee what will happen in 10 or 20 years from now. Realistic financial planning and getting top value for every dollar can let you achieve the lifestyle you want, now and in the future.

Why don’t you take a few moments to figure out your approximate lifetime earnings? You’ll be surprised.

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  1. Earth and Money on April 5, 2012 at 8:08 am

    I agree that this is definitely the right approach to take. Unfortunately, many people can’t be bothered to manage their money because they assume it will take care of itself or they just have no interest in it. I think a lot of this has to do with whether or not financial management values were passed on from parent to child, which speaks to the importance of doing this as a family! A child who grew up never thinking or worrying about money is not likely to have much of an interest in managing their money as an adult.

  2. Modest Money on April 5, 2012 at 8:30 am

    That’s a good way of looking at the big picture – thinking of all the money you will earn in your lifetime. People might be more inclined to manage their money better if they stop to think how much they might be wasting overall. I think a big part of the problem is that too many people do not earn money lessons when they are younger. So they make all kinds of financial mistakes. These very mistakes may make them look well off and could be leading their peers to strive for those some unnecessary luxuries.

  3. John @ Curious Cat Investing Blog on April 7, 2012 at 4:04 pm

    Money management is a skill and a habit. One thing people can really benefit from is remembering that others in your city likely save money with much less coming in the door than you have. Your choices make the difference more than your income. Choosing not to save is just a choice.

    I look at saving as a requirement. If I want to buy stuff that would mean I can’t save then I need to earn more money. It is as simple as that. Once you get the habit of saving before you spend it really isn’t hard. There is tons of junk we buy that really adds no value to our lives – you don’t miss it once you get the right habits.

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