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KEYS TO SUCCESSFUL FINANCIAL MANAGEMENT

KEYS TO SUCCESSFUL FINANCIAL MANAGEMENT. ALWAYS HAVE ADEQUATE WITHHOLDING TO COVER INCOME TAXES DON’T RELY ON EXEMPTION CALCULATION TO DETERMINE WITHHOLDING RATE ALWAYS PAY OFF ENTIRE BALANCE OF CREDIT CARDS OR ONLY USE DEBIT CARD

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KEYS TO SUCCESSFUL FINANCIAL MANAGEMENT

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  1. KEYS TO SUCCESSFUL FINANCIAL MANAGEMENT • ALWAYS HAVE ADEQUATE WITHHOLDING TO COVER INCOME TAXES • DON’T RELY ON EXEMPTION CALCULATION TO DETERMINE WITHHOLDING RATE • ALWAYS PAY OFF ENTIRE BALANCE OF CREDIT CARDS OR ONLY USE DEBIT CARD • IF YOU USE CREDIT CARD DETERMINE ONE THAT GIVES BEST VALUE FOR PURCHASES, DON’T BASE ON INTEREST RATE • ACCUMULATE EMERGENCY FUND EARLY • FINANCE HOME OVER 15 RATHER THAN 30 YEARS • FINANCE CAR(S) ON SHORTEST PERIOD YOU CAN AFFORD • CONSIDER PURCHASE OF YEAR-OLD CARS TO AVOID FIRST YEAR DEPRECIATION • NEVER BUY ORDINARY LIFE INSURANCE (BUY TERM LIFE POLICY) • ALWAYS PUT IN AT LEAST THE MINIMUM AMOUNT REQUIRED TO MAXIMIZE THE COMPANY MATCHING OF YOUR 401(K) • TRY TO SAVE 10% IN EARLY YEARS, MORE AS INCOME RISES

  2. KEYS TO SUCCESSFUL FINANCIAL MANAGEMENT • ONLY INSURE WHAT YOU CAN’T AFFORD TO LOSE • MAXIMIZE DEDUCTABLE PROVIDED YOU HAVE SAVINGS TO COVER • HAVE PAYCHECK DIRECT DEPOSITED WITH A PORTION INTO A SAVINGS ACCOUNT • RENT IF YOU THINK THAT A JOB MOVE MAY BE REQUIRED IN LESS THAN 4 YEARS • UNDERSTAND THAT HAVING TO SELL A HOUSE CAN LIMIT YOUR ABILITY TO ACCEPT A BETTER JOB IN ANOTHER CITY • EXCEPTION IF MOVE IS WITH COMPANY THAT COVERS MOVING COSTS • UNDERSTAND THE PRINCIPLE OF RECURRING NON-RECURRING ITEMS • STUFF ALWAYS HAPPENS • ALWAYS HAVE A CONTINGENCY PLAN • BOTH SPOUSES MUST AGREE ON LIFESTYLE DECISIONS

  3. BUDGETING TECHNIQUES • NO-BUDGET BUDGET (IF YOU HAVE CASH—SPEND IT) • REQUIRES FULL PAYMENT OF MONTHLY CREDIT CARD CHARGES (THIS MAY REQUIRE KEEPING TRACK OF ALL CHARGES TO KNOW WHEN CASH LIMIT HAS BEEN MET) • REQUIRES WITHHOLDING OF SUFFICIENT TAXES • REQUIRES 10% PUT ASIDE FOR RETIREMENT (401k OR OTHER PLAN) • REQUIRES DEPOSIT OF PORTION OF PAYCHECK INTO SAVINGS ACCOUNT TO ACCUMULATE DOWN PAYMENTS FOR HOME AND CARS AND OTHER BIG-TICKET ITEMS • REQUIRES GOOD COMMUNICATION BETWEEN SPOUSES CONCERNING EXPENDITURES • IF YOU DON’T HAVE GOOD DISCIPLINE, CONSIDER DAVE RAMSEY’S CASH ENVELOPE PLAN • BENEFIT—DOESN’T REQUIRE KEEPING TRACK OF INDIVIDUAL EXPENDITURES

  4. BUDGETING TECHNIQUES • ANNUAL/MONTHLY BUDGET • REQUIRES DETAILED UNDERSTANDING OF YOUR SPENDING PATTERNS • REQUIRES MONTHLY TRACKING OF ALL EXPENDITURES—USE EXCEL SPREADSHEET • REQUIRES FOLLOWING KEYS TO SUCCESSFUL FINANCIAL MANGEMENT • DRAWBACK—CAN BE VERY TIME CONSUMING AND REQUIRES CONSTANT MONITORING OF EXPENDITURES • BENEFITS • HELPS YOU UNDERSTAND WHERE YOUR MONEY IS BEING SPENT • FORCES YOU TO HAVE A DETAILED PLAN FOR THE FUTURE • TECHNIQUE CAN BE USED FOR PERSONAL OR BUSINESS PURPOSES (BUSINESSES REQUIRE DETAILED BUDGETS TO OBTAIN FINANCING)

  5. ANNUAL/MONTHLY BUDGET DETAIL • DETERMINE WHAT INDIVIDUAL EXPENSE BREAKOUTS YOU WANT TO DETAIL • DON’T GET SO DETAILED THAT YOU SPEND ALL YOUR TIME TRACKING MEANINGLESS ISSUES • DETERMINE TIMING OF BIG ITEM PAYMENTS • BE REALISTIC/CONSERVATIVE • DON’T FORGET ABOUT INFLATION • PROVIDE FOR CONTINGENCIES • REVIEW AND MAKE ADJUSTMENTS WHEN NEEDED

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