Personal Finance Dos and Donts

By: Leo J. Quinn, Jr
Every single one of us—no matter our location, age, gender, hair color,family background or race—has to manage our personal finances.For some, it’s an exciting passion, a never-ending game of “how much can I accumulate in one lifetime".For others, it’s just part of life, something that needs to be dealt with but doesn’t border on obsession.And finally, for many of us, personal finance is nothing but drudgery at best and an emotional trigger at worst.Fortunately, there are a few simple rules that will help anyone stay ontrack, and reduce the amount of stress involved when it comes to makingsure personal finances are well in order.DO get organized. Even if you’re a “messy", this Do is crucial.You’ll miss important due dates, pay exorbitant late fees and possiblyget into serious debt (or credit trouble) if you don’t have a handle onwhat you owe and when you owe it. A simple rule of thumb: the messieryou are, the simpler your system. DO draw up a spending plan. Every dollar that comes into yourhousehold goes out in one way, shape or form, even if it’s to a savingsaccount. Know where your money’s coming in and where it’s going.Without this information, you can’t possibly make wise financialchoices. Overwhelmed by the thought? Ask a financially responsible friend orrelative (whom you trust) to do it for you. You can’t argue withsuccess—and they can help you make the hard decisions when it comes tohaving to “trim" spending in certain areas.DON’T cut out all your fun. Decide, along with your family,what’s most important to you in terms of living a happy life.

Thendivide up your budget accordingly. If your family really enjoys eatingout, plan for it. Just keep in mind you may have to spend a lot less ongroceries or clothing. If none of us are the same then our spendingplans shouldn’t be the same. If you love to read then cutting back oncable TV wouldn’t be a problem. If you love to watch sports, thencutting back on cable TV would be a serious problem.DO allow impulse spending. Yup, you read it correctly. Unlessyou plan for a certain amount of miscellaneous, unexpected expenses inyour spending plan, you’ll always feel as though you’re blowing yourbudget when you pick up items you weren’t planning to buy. Just likeanything else, give yourself a “buffer". A side benefit: you get toskip the guilt when you pick up that neat velour Elvis on the boardwalk.DON’T use your local bank – unless you absolutely have to. Checkout all available credit unions first. In most cases, they’ll havebetter rates and more friendly policies on everything from fees tolending practices. Each dollar you deposit buys you a share, ormembership, in the credit union. So instead of being a customer you’reactually a “member". Like the ad says, membership has its privileges.DO use a debit card with protection. Before you use a debitcard, make sure your checking account is safe in case you lose yourcard or it’s somehow stolen. Also make sure you have the right toreverse charges in case merchants don’t provide the goods or servicesyou purchased. DON’T buy a new car. Considering the fact that new carsdepreciate thousands of dollars as soon as you drive them off the lot,can anyone explain why buying a new car would be a good idea?DO run numbers before every major financial decision.Conventional wisdom works—most of the time. But there are alwaysexceptions. For example, in most cases, it doesn’t make sense to borrowfrom a 401(k). But there are instances where it’s financiallybeneficial. You’ll hear it preached from the rooftops that youshouldn’t use a home equity loan to pay off credit cards, or that debtconsolidation loans are nothing but trouble. But if you’re financiallyresponsible and ran into some tough circumstances, a HELOC or debtconsolidation could be a lifesaver. Search online for calculators thatwill help clarify the situation. Numbers don’t lie.And finally, perhaps the most important “Do" of all…DO remember that personal finance is just that—personal.Everyone loves to give advice, and everyone loves to share theiropinions. What worked for your mom and dad may not work for you. On theother hand, they probably have years of wisdom you can draw from.Consider your personal finances an extension of who you are and whereyou’re going. Study the topic, and take the time to develop your ownunique strategies when it comes to saving, spending and investing.During this information age there’s never been a better time to findthe facts you need, in record time.Everyone has finances. Get personal when it comes to yours.

Finance
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Finance