Money is not for Spending

 

“Money is not for spending” the headline screamed. Intrigued by the seeming misnomer, I dove into the article. Financial management skills had never been one of my strengths, and I was eager to learn. By the time I reached the end of the article, I had a firm understanding of this principle.

Where does money come from?

Money is a natural resource, just water and land. It is already a part of the earth. We obtain money by tapping into the economic cycle that already exists. It has three key components:

·         Obtaining raw materials and turning them into products

·         The sale and distribution of products to consumers

·         Providing consumer services

What do we do with our money?

Once we obtain money, our financial management skills provide us with a blue-print for its use.  This is done through the following step-by-step process:

1.       Put the money in a safe place

We put our money in a financial institution that provides banking services, including (but not limited to) checking, savings, money market, debit cards, credit cards, and bill paying services, along with protection of our assets.

2.       Give a percentage to charity

Giving back to society through charitable donations creates an attitude of gratitude. When we give, we are more likely to care about those who are in less desirable circumstances. Setting aside a certain amount each month for giving puts us in a position to be an asset rather than a liability.

3.       Set aside a suitable amount for future needs

Creating a nest egg of funds allows us to make major purchases without incurring debt. We use these funds for such things as appliances, home repairs, school tuition, and vehicles. The more we set aside, the sooner we are ready for the unexpected.

4.       Take care of essential expenses

Pay the “bills” first. Expenses for such things as a place to live, electricity, running water, and transportation usually come in the form of monthly statements. Paying these expenses on-time increases our credit rating and gives us financial security.

5.       Budget wants carefully

The remainder of our money is allocated for food, clothing, communication, entertainment, and other personal and family desires. Keeping these expenses within reasonable limits allows us to have discretionary funds for the things that we really want.

How do we control spending?

Our financial management skills are tested regularly when we enter the market place. Advertisers know that spending money is an emotional experience, and they do everything they can to get us to make the decision to open our wallets.

If we decide ahead of time what we will purchase, how much we will spend, and when we will walk away, we can get out of the store and back home with money still in our pockets. Remember, there is always a sale, and if we don’t find what we are looking for today, chances are, we will find it later.

The important lesson that I learned from the article was that money is not for spending! Money is a resource at our disposal. Our efforts to conserve it will bring great dividends. When properly managed, money is an asset that will take us into a productive and promising future!