Why It’s Important to Know How to Manage Your Money

By Dana O. Crandell,

In today’s electronically-oriented society, a surprising number of people never learn to create a budget, balance a checkbook or handle other everyday tasks to keep track of finances. Many of us are simply too busy with our fast-paced lives and believe we can’t afford to take the time. The fact is, though, it’s more important now than ever to know how to manage your money. The high-speed, digital society we live in brings new pitfalls to avoid and the old ones are still there, too. Let’s look at a few good reasons to know where your money is going.

You May Spot Theft Before It’s Too Late

It’s far too easy to become a victim in today’s world. Watch the evening news on any given day and you’ll probably hear at least one story about someone being robbed of their hard-earned money and/or identity. There are new risks around every corner and modern thieves use subtle, intelligent methods that are hard to spot. The best way to know something is wrong is to always know how much money you should have. Spotting discrepancies early means you have a better chance of finding out what happened and taking steps to correct the situation.

There’s Less Chance You’ll Pay For Someone Else’s Mistake

Banks make mistakes. So do creditors, stockbrokers, and cashiers. If you’re always aware of what should be happening with your money, you’ll see the red flags when something goes wrong. Were you charged an extra fee on your checking account this month? Is this month’s water bill significantly higher than normal? There are hundreds of ways you can lose money because of human or machine error. Unless you’re managing your finances, you may never know when it happens to you.

You’ll See Problems Before They Become More Serious

If you’re always aware of where your money is going, you’ll know when too much of it is going to a particular area. If you’re suddenly putting too much gas in the car, maybe it’s time to have it tuned up. Are the heating bills soaring while the temperatures are about the same? Maybe it’s time to check weather-stripping and change the furnace filter. Keeping abreast of your spending will give you a chance to nip potential problems in the bud.

You’ll See What’s Working For You

Managing your money also gives you the opportunity to identify your good investments. You may find that using one credit card pays better dividends than another, or that your recent changes to your checking account are saving you a few dollars a month. Knowing you’re improving your financial status is a good feeling. The best way to know is to see it for yourself.

You’ll Know Where You Have Room For Adjustment

If you’re budgeting and tracking your money correctly, you’ll know what changes can be made when a need arises. If there’s an emergency or any sudden change in your cash flow, you’ll have a better idea of what you can do to maintain stability. A little spending cutback here or there could help you avoid serious damage to your finances and reputation with creditors.

You’ll Improve Your Overall Security

By handling your money management tasks yourself, you limit the number of people that have access to your funds and information. That in turn reduces the risk that information or funds will find their way into the wrong hands.

Your Financial Status Follows You Everywhere

One of the disadvantages to living in the Information Age is the fact that your credit score and financial history are far from private. Those records can affect your buying power, your living accommodations, and even your job. If they’re that important to the people you deal with, it stands to reason that they should be doubly important to you.

It’s Easier Now Than Ever To Manage Your Money

On the positive side of living in today’s world, you have easy, convenient access to all the tools you need to manage your funds. Banking, buying and selling, stock trading and almost anything associated with financing can be handled online, from the convenience of your home or office.

Your Goals Will Be Easier To Realize

The simple, everyday tasks you perform to keep your finances under control will serve as a constant reminder of why you’re doing what you’re doing. You’ll be “keeping your eyes on the prize”, which we all know is the best way to win.

You Aren’t Going To Live Forever

This has always been one of the best reasons to keep your finances in order and it’s even more important today. Whether you’re raising a family of your own or still single, when you die, someone you leave behind will have to be responsible for the expenses associated with your death as well as settlement of your estate. It’s simply not fair to your loved ones to leave nothing behind but debts and it happens far too often – life insurance benefits only go so far.

No matter how small or large your bank account, managing your own money makes sense. It’s your future. Who better to build it than yourself?

(Photo courtesy of meddygarnet)