Money 101

Managing your money doesn’t have to be complicated, but it does take some discipline and focus. Once you have your finances under control it will change your life forever. For all the complicated tips and advice out there, often times our failure to manage our money lies in our inability to follow through on some basic money principles. Here are five:

  1. Spend less than you make. When you aren’t making much money, cutting back and saving sounds almost impossible, but it’s not. The key here is deciding what is important to you. If you prioritize your spending, you will free up money to set aside, even if you start small. Establishing this habit is imperative if you ever want to reach other larger financial goals.
  2. Make a plan. Making a plan is putting into action your desire to spend less than you make. This can be split up into three parts:
    1. Set some goals. If you don’t know what you are aiming for, it is hard to hit your mark. Setting some attainable goals will bring passion to your discipline, helping you to stay the course.
    2. Create a budget. Give every dollar a purpose to help eliminate financial leaks that waste money away.
    3. Track all your spending. This includes every dollar that comes in and every dollar that goes out. Only if you know where your money goes are you able to make changes along the way to stay on course.
  3. Get out of debt. You want your money to work harder for you, not somebody else. In regards to consumer debt, it is critical to pay it down as fast as possible. Make sure you make all your minimum payments, but put extra money towards the credit card with the highest interest rate. Pay this one down and then move on to the next. Make sure you don’t close your credit cards once they are paid off, instead leaving them at a zero balance.
  4. Save and invest. It’s easy to tell yourself that you will save later on when you have more money, but in reality “later” either comes too late or it never comes at all. Start saving any amount now. Money you save now begins accruing interest now, making you more money down the road!
  5. Make savings automatic. Either set a recurring transfer through your bank or have money directly deposited from your paycheck into a savings account. The less you have to think about it the fewer excuses you will come up with as to why you are unable to save. Set it and forget it and watch your savings grow.

When these basic money principles are applied to your life, your finances will take on new life. As your net worth grows you will experience a new level of a freedom that you may never have experienced before.


About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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