Times change. Hair styles change with the times, car styles change, popular home decorating colors and designs change – everything in our world is always fluid and in motion. Even history, or at least our interpretation of it, seems to change as we rethink things in light of new understandings and changing social values.
The Need for Money Management
Everyone needs to manage their money. We hear of movie, music and sport stars who go bankrupt after earning millions because they didn’t manage their money well. This is an issue for rich, poor and everyone in between: you need to be able to manage your money so that what is being spent is less than what is being earned.
The key in any times is budgeting and sticking to that budget. Remember this tip: when creating a budget add in everything: utilities, mortgage and other bills, but also food, entertainment, clothing, diapers, retirement savings, gifts… everything.
How Money Management Changes over Time
Even the best advice for money management changes over time.One example is the advice of financial consultant and famous advisor, Suze Orman. She used to advise people to have a liquid savings of at least six months’ worth of pay, and she said that having available credit on your credit cards or money in a retirement account did not count towards this savings. Today, her advice is somewhat different. Given the recession of the new millennium, Orman now recommends 18 months’ worth of savings. However, she also says that available credit on a credit card and funds deposited in a Roth IRA (deposits, not interest earned) can count towards your liquid savings.
So, as we see, even money management procedures change with the times, becoming new and better based on the state of the world at the time. Let’s look at a few more modern issues surrounding management of your family funds.
Whose Responsible for Managing Funds?
You may think that only the head of the household needs to know how to manage funds properly. Sure, the person who holds most of the purse strings needs to manage money well. But, every member of the family needs to learn fiscal responsibility. If one person is being careful, but the other partner is spending like there is no tomorrow, problems will happen in the checkbook and in the relationship. Children, too, need to learn to handle their money responsibly; this is why for older children an allowance can be a great learning tool.
Of course, sometimes the money management seems out of your hands. For example, you may have a long term investment (such as a CD or a home) that you want to cash out, but the market won’t allow it. Or, you may have won a personal injury lawsuit that resulted in a structured settlement payment. In such a case the annuity company is probably controlling your money.
If You have a Structured Settlement, Times may be Changing
If you do have a structured settlement and an annuity company is controlling your money, consider whether now may be the time to cash out. There are options for selling your payments if you need a lump sum of cash now. Perhaps you have large debt, costing you a fortune in interest – you may want to pay it off by selling your annuity. Looking to buy a new home or a new car? Selling your payments may be the right choice. As your financial needs change, selling your settlement payments might be the answer that you are looking for.
Moving into Your Future
To manage your money well you want to look at your goals, both short term and long term. Ask yourself: How much should I save for retirement? Do I have enough savings? Am I spending too much money on unimportant things? Am I paying too much in interest? What is my top financial priority? And remember to ask yourself these questions every year, because times change, and your financial goals – what’s important to you – will change with the times as well. But despite these changes, remember one thing: enjoy the present while saving for the future.