Let your money work for you with these money managing tactics!

Managing money is one of the most important core foundations that one should learn if they should want to be successful. If someone earned $100 and immediately spent it on a lavish meal, then they would be back to square one. If they spent half of it on a meal, and saved half of it for rent, they would be in square 2. If they spent 25% of it on the day’s food, 50% on rent, and 25% on investing, they would be on square 3.

Saving your money

When you get your first paycheck, it is vital to brainstorm how you will allocate your money. Rent, food, gas, basic necessities, and even retirement will all be nagging for a piece of your money. If you are earning less than what you can sustain for your current lifestyle, consider becoming more frugal to save money. Becoming frugal means to conserve your economic spending. This will limit your spending on wants, like entertainment, and save it for needs, like rent. Before you act, you should also think about investing for your retirement.

Assets and compounding

A question I was once asked is: Would you rather have a million dollars, or start off with a penny and let that amount double itself for 30 days? Without doing the math, I instantly thought that the million dollars was the better value. After all, a penny was less than a thousandth of a million. However, if you patiently waited and received the magical penny, you would get a grand total of $5,368,709.12. This is the power of compounding and well managed money. These items all compound, if managed wisely.

Stocks

Stocks provide the greatest opportunity for growth, but also the greatest risk.

Stocks are very small pieces of a company that are sold in return for a sum of money. If the company grows, then the price of the shares rise, or the value of the company. However, if something underperforms, then the value of the company decreases, along with the shares. Stocks can be bought and sold with a broker.

Bonds

Bonds are debt. The government doesn’t make enough money each year to pay for all of their expenses. Therefore, they supplement with debt. When you buy debt, you expect to receive the money you initially gave the person and plus some. That is called interest, which is like an extra payment given to the loaners to supplement their risk. Some people consider this the safest investment due to the fact that the government has a 100% return rate since they can print money to pay people back. You can also buy loans from companies, though they are more risky.

Real Estate

Owning real estate means that you own the land and the building that is on it. Owning property simply means that you own the land, but not necessarily the building as well. Purchasing real estate can be for yourself, or to rent it out. By renting it out, you are offering someone to live in your property in return for a fee every month. Buying good real estate depends on numerous factors, such as location, quality, design, and more.

Debt

Debt is probably going to appear in your life at some point. Like said in the Bond section, debt is giving one person a sum of money, in return for all of it back and plus some, at some point in the future. When you can’t pay back your debt, the interest levels rapidly increase, which causes you to pay even more. Debt can come in a variety of forms, including credit cards. It would be wise to consider the interest rates on the debt you are applying for, and determine if there can be a better deal for you. You may also want to consider if the debt is worth it at all.

Storing in a bank

Storing your money is the safest option, but it also yields the least returns. In fact, you can be losing money. to inflation. Storing your money in a bank is covered up to $250,000 if the bank goes under. When you leave your money in a bank, the bank takes that money to loan it out to make a profit. This is what caused many banks to become bankrupt in 2008 as they gave debts to too many untrustworthy customers. It would be a good idea to keep some money in the bank for rainy days, or if your investments go under.