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money management
financial decisions
incomes
advices
personal finances
average person
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thousands of dollars
debts
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4 Advices You Should Hear About Money Management
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4 Advices You Should Hear About Money Management

Have you ever been in a situation where you're asking yourself a question - 'Oh my god, I've earned x hundereds/thousands of dollars, and I'm left with debts - where's the money?'. This article will help you prevent this from happening.

There are several ways to get on top of your finances. Wealthy people know where their money came from, and where their money went. Most of them are raised with such habits, to always monitor their incomes and outcomes. They understand which incomes and outcomes to make to create financial wealth. 4 advices you should hear about money management.

1 - Understand incomes and outcomes - Both of them belong to 3 categories; active, passive and portfolio incomes - expense, asset, liability outcomes. Active incomes are the ones you're trading your time for. Passive are made by creating business that are automated, and produce you money without your activity. Portfolio incomes are generated from profit on investments in businesses, stocks, commodities, etc.

On the other side, asset outcomes are those by which you've invested in whatever's going to bring you money in the future, liability outcomes are the opposite, and expenses are simple outcomes that won't get or take you money in the future. Buying items unrelated to businesss belongs here. Learn more about those from various other resources, and take notes!

2 - Do personal finances - It's a surprising fact that many people aren't doing personal finances, and a large percentage of them never even thought about it. It's uncommon for average person to track all their incomes and outcomes, to note every transaction that has occurred. Doing that is extremely useful, though. If you tag all your outcomes as 'expense', 'asset' and 'liability', you'll get an overview of where your money's going. That will also prevent you from making unwise financial decisions, because when the transaction happens, you'll know you'll have to tag it as 'expense' or 'liability'.

3 - Get a feeling of being on top of your finances - Do you feel the money slips through your fingers, or do you feel you're in full control of yor financial situation? This feeling alone is really powerful, and shouldn't be neglected. You'll be more secure about making financial decisions, and they'll be wiser and wiser overtime.

4 - Expand incomes - Be fully clear with yourself on how much money you need on a monthly basis to cover life expenses, at least. Then, expand your incomes to the level where you can invest it in assets - things that will create money for you in the future. This is easily said, but really challenging to pull out, for many reasons. It requires big self-iniciative and sel-discipline to earn more than average. But, without solid financial background, you'll find it hard to create cash producing assets, unless you're comfortable with going into debt for investments or you're able to create assets without capital.


Street Talk

The story of my life for many years. :) I now know where the money is. :)

Reply
  about 8 years ago
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