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Control Your Money

Posted on Wed Jul 15, 2020, on Estate Planning

Managing your money is not always an easy or a fun thing to do. We sometimes put it off until it is too late.

If you start early with small amounts over time and you spend less than you earn, you can take real control over your money and be a financial success. It is a simple concept money comes in and goes out, and we should control our money, and not let our money control us. If you are conscientious about managing money, you can work with a CPA, CFP, or Financial Planner, together you can get your money working as hard as you do!

Your Money has only four potential uses in your life:

  1. You live on it.
  2. You give it away.
  3. You pay what you owe in debt or taxes.
  4. You make it grow through saving and investing.

Since we control our money and not the other way around, Which of these uses is most important to you to attain? Which do you want to see become a smaller portion of your plan?

Live: Living is often the largest portion of money spent at least at the start of your career. Living expenses are housing, food, utilities, transportation etc… We often think that higher income increases the standard of living. Wise managers of money will ask themselves if increasing their standard of living is necessary. Often, they will set limitations on their living expenses. Increasing income does not mean it should all be spent maintaining a certain lifestyle.

Give: It is helpful to me when doing this exercise, to separate “productive” uses of money and “consumptive” uses. What has lasting value and what is just “consumed”? Giving, to me, is the ultimate productive use because of its eternal impact. Serving people and furthering God’s truth have eternal value. (Many people see giving as a guilt offering of sorts — that would equate to a consumptive perspective.)

Owe Managing your finances successfully means avoiding taking on too much debt. Paying interest is not wrong, especially if you consider what you can earn with your money in comparison, or what you can do with the liquidity. Debt may increase your risk because of the obligation it creates that your future circumstances may not be able to meet. When borrowing takes place, it should include a reasonable way to pay it back. We are to pay our fair share of taxes, which means not cheating the system, nor paying more than what we are prescribed.

Grow: To meet long-term goals of retirement, you need to save! How we save and invest for the future should be charted out based on short-term and long-term priorities. In order to grow your money, you need to set up a comprehensive financial plan, which can provide a structure for sound decisions today based on an uncertain future that will achieve your goal of growing your money. You can set up the plan yourself or get assistance from a financial planner. “Growing” should be an essential habit to get the best use of your hard-earned money. The reason growing your money is important is that it will make your future more flexibility. Conversely, as you reach your savings goals it may make sense to consider reducing your growth allocation as savings become reasonably adequate.

You must ask yourself several questions:

  1.  How much is enough?
  2. How do I reach that goal?
  3. Do I need advice of a Financial Advisor to reach my goal?

Please be careful because simple to do is also simple not to do. The meaningful impact to your family plan is in the doing of simple things repeatedly and long enough to ignite the miracle of the Compound Effect. Financial decisions can be complex, but the all-encompassing uses of money are not.

Hopefully you found this article useful, please follow this link for more information about how to Control Your Money.

Take the time to put together actionable steps toward creating a “Live, Give, Owe, Grow” plan you want to pursue…. ROSEMARIE A. CONNOLLY, CPA CFP 1001 Darby Road – Havertown, PA 19083 231 Sutton St. Suite 2D – N. Andover, MA 01845 office: 800-758-1112 extension 700 email: website: Financial Planning Havertown fee-only financial planner

Peter KlenkPeter Klenk

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