Be the CEO of Your Finances

                                                  

If you mismanage your finances these bad habits can carry over in other areas of your life. When your finances are out of balance so are other areas of your life such as your career, relationships, family and health. Managing your finances properly requires discipline, attention to detail, organization skills, strategic planning, sacrifice, and logic skills. These skills are also useful in other areas of your life. Being the CEO of your finances reduces stress, anxiety, sadness, frustration and anger and helps keep your life in balance. Become the CEO boss of your finances by following these 8 steps.

Track Spending

Spend less than you earn. Create a budget to track and control spending. Subtract your monthly expenses and debt from your total monthly income after taxes.  If you have less than5% left over make some adjustments.  Make your budget flexible to accommodate for unexpected expenses and include savings goals.  Set short-term and long-term goals such as paying off a bill and saving for a down payment on a house. Create an emergency fund to cover monthly bills and expenses for 9-12 months. Balance your checkbook and write down or verify every transaction, including check card transactions and trips to the ATM. Spread spending for large purchases over several months to ease the burden. Reduce spending by 30% to reduce financial risks. Downsize or downgrade your lifestyle if you are experiencing a financial crisis.  

Get Coverage

Insurance is a form of protection against loss, damage or theft.  Insurance should provide enough to reimburse for loss or damages. The basic types of insurance everyone should have are: health, life and disability especially if you have children. Health insurance is needed if you develop a health condition or need to go to the emergency room. Disability insurance is used if you have a short-term or long-term medical condition that prevents you from working and ensures that you still continue to receive a paycheck, usually at least 60% of your salary. Life insurance is used in the event a family member dies and should at least be enough to cover burial expenses.

Insurance needs grow as you get older so ensure your coverage and beneficiary information remain current. Buying insurance will save you money in the future and help you get over any financial crisis you may experience.  You may not see the immediate benefit of buying insurance but in the long run you will be glad you did. 

Boost Income

Go back to school to further your education to boost your salary. Many employers offer free or discounted training so take advantage.  Keep a copy of each certificate in your employee file. Skip getting a tax refund and adjust your withholdings to get your money throughout the year.  Get an additional stream on income such as a part-time job, invest in a profitable business or start a business to boost your income.

Monitor Credit

Keep good credit. Whether right or wrong - credit is used to judge your character and affects your ability to get hired for a job, get insurance or get approval for credit.  Pay your bills on time or setup payment arrangements to maintain a good relationship with your creditors. Review your credit report at least once a year and at least 3 months before making a big purchase such as a car, home or starting a business.

Know Your Worth

Know your worth. Know your worth in your job industry and ensure you are getting paid what you are deserve. Avoid being shy and ask for what you want.  Notify your direct supervisor and their supervisor your top skills and key accomplishments each quarter.  Maximize employee benefits and monitor your benefits package. Ensure your package has portability and know the vesting rules of your retirement plan. 

Don’t be a Sponsor

Avoid loaning money to others even if you can afford it especially if you are the person who earns the highest salary in your social network.  If a person mismanages their finances loaning money will only enable them to continue their bad money habits.  Instead, offer to pay for them to attend a financial course or buy them a self-help financial book.

Debt

Pay down debt and get current on late accounts.  Keep debt (excluding rent/mortgage) at 15% or less of your net monthly income. Keep credit card balances at 20% or less of the credit limit. Pay more than the minimum monthly payment. Pay back student loans. Consider using student loan forgiveness programs. Pay with cash instead of credit cards. Keeping an emergency fund prevents you from going into debt. Plan for the future and always have a plan A, B and C.

Estate Planning

Your daily decisions affect your future so live for tomorrow instaed of today. Create a will to begin setting up estate planning. Create a medical directive to identify your medical wishes.  Also consider opening a trust to maximize tax shelters and minimize probate costs.  Max out your tax advantaged retirement plans. Commit to saving a set percentage of your income, so when your income increases, your contributions will also increase. Focus on long term growth. Leave your money untouched for the next 5 to 10 years to see the benefits of your money growing. Invest as much as you can in tax-deferred retirement plans, such as 401(k) plans. Your money will grow faster and you can afford to invest more now because you won't have to pay taxes on the money until you retire.

9 Ways to Mind Your Money

                                                               

There are several books, websites, articles and television shows that talk about how to save money, spend money wisely, and invest your money and more.  None of these tools can help you if you don't take the time to realize how your thinking affects your spending habits.

Money can be used to help you achieve your dreams, and can help identify any painful or traumatic experiences you have had with money.  If you overcome those experiences and move on you can begin having happy experiences with money.  You must learn how to remove your negative emotional attachments to money such as fear, doubt, worthlessness, stress, depression, guilt, hurt, jealousy, envy and anger.

Negative thoughts become negative feelings. Negative feeling become negative words, negative words become negative actions.  If you continuously make negative statements about your financial situation you will manifest those statements into reality.

Financial Planner Vickie Champion has a quiz that determines if you need to change your relationship with money.  The quiz can be found at http://vickiechampion.com/about-money-issues/money-quiz/. The first step to change the way you think about money is to admit that there is a problem.  Face the problem head on.  By doing this you will be able to eliminate those negative thoughts, beliefs and emotions that are attached to money and be able to turn them into positive thoughts that will manifest themselves into positive actions and prosperity.

Decide if you want to continue to struggle with your finances or if you want to improve your financial situation. You will continue to struggle with your finances and experience financial crises if you:

1. Buy things you don't need
2. Spend more money you can’t pay back
3. Continue to bounce checks or pay overdraft fees, late fees or other fees
4. Use payday loans, checking cashing stores or cash advances to pay your bills
5. Don't have a monthly budget or don't stick to your budget
6. Don't have a saving or retirement account
7. Don't have health, life or disability insurance
8. Live paycheck to paycheck
9. Have creditors calling your house day and night or sending harassing letters
10. Are depressed and stressed out over your money situation
11. Are afraid to spend your money
12. Have credit cards that are maxed out
13. Unable to buy or pay for basic necessities due to your financial situation

Here are 9 ways to mind your money:

1. Remove the following phrases or any negative phrases you say about money from your vocabulary: I can't, I don't have, I will never be able to, I am a loser, I am broke, I have nothing, I will always be in debt, I don't have any money, I will have to work until I am 65, I will never be able to buy a house, the more I make the more I will spend, money is the root of all evil, I am not good with money, etc.
2. Be thankful and responsible with the money you have. If you cannot be thankful and responsible for what you have now, how will you be able to handle your finances if you gain more in the future.
3. Think about your childhood and identify any traumatic or painful experiences or beliefs you had about money and write them down.
4. Write down why you felt that way regarding each experience.
5. Write down how those thoughts have affected you as an adult.
6. Ask yourself if you really believe those thoughts, have they just become habits or someone else's thoughts or habits. If they are someone else's thoughts or habits then you can easily eliminate them. If they are your own thoughts, then you have to make a commitment to yourself that you will stop having negative thoughts about money.
7. Each time you have a negative thought or make a negative statement about money or your current financial situation and immediately write down why you feel that way. Then write down a positive statement that is the exact opposite of that negative thought.  If you need additional reinforcement buy some books on positive affirmations. You can also put an empty jar or water bottle somewhere where you will see it often and place $5 in the jar every time you think or speak a negative thought about money.  Repeat this for 30 days.  By the end of 30 days you will have begun to change your thoughts about money. Whatever money you have in the jar after the 30 days use that money to pay a bill, put in a savings account or investment account.
8. Create a budget and make a serious change in your spending which will require sacrifices.
9. Set a monetary goal that you wish to accomplish and a deadline for that goal, i.e. I will pay off my Visa credit card by June 30, 2013. Once you accomplish your first goal continue to make additional financial goals and continue this throughout your life and you will see your financial situation improve and your negative thoughts turn into positive ones.

You must believe that money does not make you smarter, nicer, more successful, more intelligent or a better person and that money will not solve all of your problems.  Your character determines all these things not money.  If you were a mean person when you had a few dollars you will continue to be a mean person when you have more money. 

Make this affirmation, "In the past I have used my negative thoughts to create debt but from this day forth I will use positive thoughts to create wealth."  I leave you with one of my quotes, "Money has the ability to generate debt or generate wealth, you make the choice". Remember to mind your money.