The first thing you need to understand is what the word 'economics' means in terms of thinking about your personal or company finances, and how you can use what it means to your financial advantage.

Forget what the media says about 'economics' when they report on the gyrations of the stock market, product shortages and demand increases, price increases, banking industry mortgage defaults and unemployment statistics. Those are 'economic representatives' that guage an area that is bigger than you can personally control.

What you do have control over is your own business and household economics. The definition of economics I am using is the original one; meaning 'the art or science of managing a household or business.' And those are things that you, as an individual, can control.

Managing a business or household is an art. It requires specific skills and abilities, like putting in organization so things run better. There is a science of managing a household or business, especially in the area involving money. Here is what you can do to guarantee that the economics of your household or business are strong and unshakable, despite the fact the general economy may be on the slippery slide to disaster.

1 - Use CASH Not Credit

Each time you buy something using lines of credit or credit cards because you don't have the money to pay for it, you are promising your future income to the the credit card company. Those future earnings will undoubtedly be needed to pay your regular household or business operating expenses. That's when you end up in economic slavery known as the credit trap.

The only exception is buying property that increases in value, like buying a home instead of renting, or investing in a commercial building that puts more income in your pocket. Using your money to make more money is smart money management.

Tip: Be sure you negotiate a big discount when you pay with cash. When the rest of the world is on the downhill run to economic disaster and credit is difficult to obtain, the guy who has the cash is king. In addition, figure out how to purchase items wholesale instead of paying retail prices to keep even more of your hard-earned money.

2 - Don't Spend More Than You Earn

Learn from your grandparents who earned little, but managed to live well. Reduce expenses to a rate that is less than your income. The most direct route to financial disaster is spending more than you make. You can keep a good quality of life while reducing optional spending. This can be accomplished by acts such as buying used equipment rather than new, and eating less often in restaurants. Don't buy something because you only want it, but don't really need it. It's just a plain good money management practice.

3 - Money Must Be MADE Before It Gets Spent

If there is some future large purchase you need to make, begin by setting aside small amounts of cash in a savings account for that purchase and keep that up until you can pay for it with cash.

On a household level, if your child will be entering college in 10 years, then figure out what the tuition costs will be and work out how much moneyyou have to set aside every week to have the full amount just before they graduate from high school. Plus turn in applications for each student financial aid package, scholarship and student grant you can locate.

On a company level, if you will need to purchase or upgrade a equipment for your office , then figure out what the costs will be and work out how much moneyyou have to set aside every week to have the full amount the month you will need to make that purchase. Plus look for each place you can locate to get the best deal possible.

4 - Put Away Some Cash for Emergencies and Living Expenses

You will sleep much better at night with the financial security of knowing you have money stashed away in a savings plan for emergencies like needing to repair the car or an office machine, having to have some unexpected dental work or experiencing a big drop in income. When you have a cash cushion you can get your hands on immediately, then magically, you don't even worry about money, and your focus returns to living life and enjoying it, and earning money suddenly gets easier.

The only thing you have to be afraid of in a great depression is not having some cash reserves tucked away in a savings plan you can immediately get your hands on.

It might interest you to know that the Great Depression in our recent past created more millionaires in the U.S. than at any other time in history. Want to know how that happened? In that time, the economy bottomed out, the stock market dropped like a rock, inflation drove prices sky-high, the unemployment rate shot up like a rocket as companys shut down, and people who lost their jobs also lost their homes.

Those who had cash stashed away were able to purchase houses, land and whole businesses for pennies on the dollar. They became overnight millionaires because they had enough cash to weather the storm called The Great Depression.

Out of every bit of income that comes in the door, immediately set aside 10% and stash it in an interest bearing account that you have designated for your cash cushion. Perhaps you'll have to cut expenses AND work an extra job to build your cushion of cash. No, no moaning about how you can't, JUST DO IT! As the weeks and months roll by you'll find you are sleeping better and are walking through life with a lot more confidence knowing you are on your way to financial freedom and have protected yourself from The Great Depression looming on the horizon.

Why is controlling the flow of your money so important? It is the energy and life blood of a household or business. It is vital to channel some of it through the income producing areas first to keep it running smoothly, and also to save some of it for future survival. Everything runs better when adequate cash is available. Our Money Management Software guides you towards making the best possible decisions of how to use your money to reach your financial goals.