1st step in Money Management

Define Your Objectives

Write your objectives down (however small or large, you can always delete some later). These objectives should be:

  • simple
  • realistic, based on your income and lifestyle expenditures
  • well defined
  • quantifiable and can be used to measure progress later
  • mostly short-term (3 months to a 1-year window) with a longer-term view

Every person/family has different money management objectives. Some examples of these objectives may include things such as:

  • spend less than your take-home pay (i.e. after tax)
  • if you do not have one, open a no-fee checking/saving account (can save $25-$50 / month depending on your financial institution)
  • if you do not have one, obtain no annual fee credit cards (can save $50-$150 / year), 2% cash back cards (or equivalent in $ terms) are getting popular, use different no annual fee cash back cards depending on applicable categories (for example, some cards give 2% cash back on groceries, gas and restaurants, others may be on pharmacy, furniture, recurring payments etc.). If you have travel cards, evaluate the points you get in $ terms and do a cost-benefit analysis (considering airfares have come down significantly)
  • pay off your credit card bills (total balance) every month [many benefits for this: 1) no credit card interest, 2) getting cash back on monthly expenses if all charged to credit cards, 3) getting interested from money deposited in checking/savings account – although minimal, 4) improving your credit score]
  • if planned properly, for cash withdrawl, always use the bank ATM (who issued the card), do not use private ATMs (this can save $2-$5 for every withdrawal), and try to minimize the number of withdrawals if possible
  • reduce your monthly mobile phone fees (use wifi or hot spots if available, rather than data – can easily save 10-20% every month)
  • look for deals on anything you plan to purchase; negotiate with banks (on fees, and interest rates), insurance companies (on premiums and better coverage), and utility companies for the best deals
  • cut down on your grocery/household expenses and gasoline costs (make a list of things needed, check your weekly flyers/apps on what are on sale nearby, jot down the lowest prices of your listed items, and select proper routing to buy all items in one trip if possible) (can save you $50-$100 / month on grocery bills and car gasoline costs)
  • do not eliminate but cut down on incidental expenses (reduce eating out – coffee, lunch, dinner, take out, entertainment)
  • save $50/month for your kids’ education
  • save $100/month for emergency funding
  • save $100/month for your retirement funding
  • save $100/month for a yearly vacation
  • save $100/month towards the down payment of an upcoming capital purchase (car, house etc.)
  • pay an extra $50/month on your mortgage (this amount goes straight to the principal, and can save you a lot on interest charges, compounded regularly)
  • review your insurance policies and see if your premiums can be reduced (if you have an older car, increase deductibles, do you really need that glass protection for an additional premium),
  • etc. etc.

What Are Your Objectives?

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