And loans are not the only things that help us to be self-sufficient. What about the good old credit cards that we always take with us no matter where we go. There is no longer a need to carry bundles of cash when going out shopping for more expensive things. A credit card swipe works just as well and is certainly much more effortless. If your wallet gets robbed, you really cannot do very much about the money in it. However, you can do your part by informing the credit card company that your card has been robbed.

Life has become extremely convenient in the world of today. I find it very liberating to be able to walk out of my house with only my little credit card for company. And yet, I am able to return home with bags and bags of groceries, some DVDs of my favorite movies, and maybe even something that cost me a little too much.

Of course, the downside is that credit cards usually tend to make us overspend. They say that women are the shopaholics, but put men in the right store and they too end up spending much more than they had originally calculated on. The culprit has to be the credit cards.

1. The Vault – this is your wealth account. Money gets deposited into this account and it never leaves, like a one-way valve. The Vault is invested and the principal is never spent. It will grow into the largest part of your net worth, generating nearly all of your investment income. If you don’t start creating wealth penny-by-penny, you’ll never have any.

2. Soft Savings – a delayed spending account. This money is marked for things that you want to buy, but can’t afford to purchase with normal pocket money. For example, a house, car, boat, vacation, college fund for kids, planned medical care, clothing, jewelry, etc. But this also includes maintenance to your home, like a roof, new appliances, new siding, paint, landscaping, remodeling, etc.

3. Paydown Debt Balances – making extra principal payments on your credit cards, car loans, and your mortgage. By chipping away at these expenses you will eventually eliminate them all, and then have more money available for other categories. Personal debt is the opposite of financial freedom and dramatically makes it more difficult to reach your financial goals. If you doubt this, look at the interest charges you pay each month and imagine if that money had been invested instead.

4. Financial Education – books, magazines, newsletters, seminars, software, investment memberships. Also, hiring professional financial advisors, tax accountants, estate attorneys, etc. (Avoid free advice a buddy, your cousin, or a friend’s neighbor – buy the best, most expensive professional advice you can afford).

As the staples of a good budget, something every person should have, expenses and income are the main financial issues a person needs to understand. To begin you should gather all the relevant information. You may want to get bills, pay stubs and anything else that could help you list out your expenses and income.

The first thing to do is to track your daily expenses. This includes eating out, shopping and gasoline. You want to include these on your expenses list. You may need to gather receipts or actually keep a log for a week to be able to come up with an accurate account of your daily expenses.

Write out a list of expenses and then write out your list of income. At this point you should concern yourself with ensuring everything is listed. If your expenses or income vary then try to get a good average. You should have expenses separated into daily expenses and monthly expenses so you can see where your money is really going. Plus this will help when you go to budget your money.

Personal finance management is a lot like business finance management: save where you can and spend where you must. For anyone just starting out in personal finance management, it is advised to draw up a list of where your money goes each month. This can be done by taking the yearly salary and dividing it by 12 to represent the monthly amount. From that, deduct federal and state taxes as well as medical fund payments and other obligatory amounts. Next up make a list of things that need to be paid like rent, power, phones, cell phones, cable, etc. How much is left at the end? What do you do with that money?

Many people dream of becoming millionaires but never do. The reason behind this is not because it is hard, but because they never forced themselves to have some small measure of discipline. Saving money where you can and then applying those savings to investments that have bigger returns is something fairly easy done over a certain amount of time and will have a great effect on your finances. But what matter is that you always have a clear concept of what your current financial situation looks like and where those finances go.

Evaluate your current financial situation. One of the most important goals for most people is financial independence. Collect accurate information about your personal financial situation. Calculate your net worth which includes the real estate, saving and retirement accounts, and all other assets. This will help you decide how much money you can set aside for meeting future needs and goals.

A basic personal finance tip is to make a budget. A personal finance budget is information made up of your income and expenses and the more accurate this information is, the more likely you are be able to meet your goals and realize your dreams. A personal finance budget should be made for at most one year at a time and include a list of your monthly expenses.

All expenses must be included. To be sure of that go through all your paid bills, check register and credit card receipts to find expenditures that recure every month and expenditures that happen less frequently. Personal finance budgeting requires some small sacrifices. To be able to make good personal financial decisions and set priorities, you must know where your money is actually going. Start your budget and accomplish your goals.

Get an electronic bill pay. This is a very convenient way to pay your bills. You pay them electronically, by direct withdrawal from your bank account. The transaction is processed immediately. You can even link your bill pay service to your personal finance budget, so that your expenditures are automatically entered in the appropriate category. Personal financial management can be really easy.

Cook at home rather than buying ready meals and takeaways or eating out.

Cut down on your treats – CDs, clothing, make-up etc. The best way in which to do this is to give yourself a budget and stick to it.

Don’t buy designer labels or expensive brands – cut down by purchasing high street clothes or the supermarket’s own brand of groceries.

Just make your own lunch, or don’t buy coffee at work, and you’ll easily save it.

Give up smoking – it’s an expensive habit.

Switch off unneeded lights in your house.

Find out whether you’re entitled to any benefits. The government has various tax credits and allowances for individuals and families on low incomes.

Open a savings account if you don’t have one and set up a standing order to ensure that some of your income goes there every week or month.

Tax-free savings accounts such as ISAs (Individual Savings Accounts) allow you to save a certain amount each year without paying tax.

Leave your savings alone – once they’re in your savings account, they’re untouchable. The more you have, the more you’ll make in interest.

Check regularly how your savings are performing and move to a bank account with a better interest rate if necessary.

If you get a bonus or extra cash, put it in your savings before you’re tempted to spend it.

Don’t buy anything on credit unless you really have to – and only then if you know you will have the means to pay it back. It’s a much more expensive way to shop, as you’ll pay back more in interest.

Teenage finance is an important part of your personal finance because, too. When your children learn to save and use money wisely, you are subsequently saved from bailing them out of financial troubles in the future.

Personal Ethics and finance go hand-in-hand; if you have a good relationship with yourself, you will be able to save money. You won’t feel the urge to do things that go against your ethics like sign-up for a credit card using someone else’s name.

Personal finance involves taking a few steps toward safe-guarding your money. Your money spent should not exceed your money received. In order to prevent this from happening, you should make a crude balance sheet and use it to record all of your transactions.

Each month write down how much was received and how much was spent. Make a list of all the things the money was spent on, so you can keep track of your money.

You will be amazed at how much we spend on things that are not necessities.

Make a list and stick to it. Always try to get the best deal for your money and remember that cheaper does not necessarily mean lower quality.

Secondly, budget to save before you spend. This idea is taken from many millionaires who recommend that you use auto-transfer each month a sum of your money and either save it or invest it into some thing like real estate. My personal favourite idea is to take a sum of money each month and use it to purchase my favourite Exchange Traded Fund which works like a mutual fund only that it just buys up the entire index of stocks. This way you do not need to work about over performing or underperforming the market and the management fees for these funds are really low.

Finally, now that you know how much money you have left to spend each month, budget how much you want to spend each month. As terrible as it may seem, try to pay for things with cash and with a debt card so that you are kept in touch with how much you are actually spending. Its so easy to flash a credit card and then lose sense of reality and you only get hit with it at the end of the month when the bill arrives. So try to remind yourself constantly about the need to avoid spending exuberance.

Every dollar that you spend eliminates its ability to earn money for you in the future. I am not recommending that you stop eating at restaurants and going to movies, I am recommending that you use some common sense, like looking at your four biggest expenses over the last few months and aggressively finding a way to reduce them.

The biggest obstacle for the first rule is personal debt of any kind (other than a mortgage for your home) or a lease of any kind. Every personal debt that you incur reduces your net worth which could have been working for you over your life time. Acquiring personal debt is exactly like putting a large hole in your wallet. In the money-game, a huge transfer of wealth occurs between the ‘Haves’ and the ‘Have-Nots’ over the words, “I can afford that monthly payment.” Here is a hint: the “Have-Nots” are the ones who make that statement. So please don’t ever look at whether you can afford a monthly payment to make a purchase; pay in cash after you’ve saved for the item. [Everything that you buy with a 0%-interest payment plan must be over-priced. Behind the scenes, your payment contract is sold to a lender with an interest rate, and retailers don’t do this without building-in an acceptable profit for themselves. Ask retailers how much the item will cost if you pay in full, and you could get a lower price.]

Rule #2 Always keep your finances under control. The first step in losing financial control and spiraling into debt and money problems is simply not dealing with personal finances. Prepare for catastrophic financial accidents with health, life, disability, and auto insurance. Plan and save before you buy something. Create a balance sheet for yourself at least once a year to see how you are progressing. Pay every bill on time, or contact the creditor to tell them what is going on and make a partial payment. If you are temporarily unable to handle any of this, ask for some help immediately and find someone trustworthy who will do this for you.

The most common source of financial trouble is a trauma in your life. This can be a health problem (large expenses or unable to work), an emotional problem (divorce or loss of loved one), or a financial problem (losing a job, cut in pay, relocation, unexpected expenses). Whichever the source may be, it leads to three emotional problems: the first is denial, the second is being overwhelmed, and the third is hopelessness. Denial causes people to not open their mail and continue spending as usual, and being overwhelmed paralyzes people from getting assistance and dealing with the situation. For example, if you just lost a loved one, balancing your checkbook and paying bills is not high in your priorities. Unfortunately, tiny amounts of debt grow with interest and penalties into seemingly insurmountable mountains of debt; leaving you with loathsome options such as bankruptcy, poor credit, declining lifestyle spending, and added stress that you bring to relationships and work.

Rule #3 Pay attention to the finances of the people with whom you spend the most time. Whether they are relatives, friends, or co-workers, these people have the most impact on your financial life. Do they consistently follow the first two rules of the money game? Do they earn about the same money as you? If the answer to either of those is “no”, then I recommend that you start spending a little less time with them; and this is why. If they don’t consistently follow the first two rules, it is unlikely that you will either. You unconsciously model the people around you, and the more people you are exposed to that don’t follow the first two rules, the more likely that you will unwittingly follow them. No one thinks they are ‘trying to keep up with the Joneses’, but we all do it to some extent, and this is the mechanism. On the other hand, if they earn a lot more money than you, you may rack up a lot of debt trying to keep up with them (meeting them at their favorite expensive restaurant, joining them for another expensive vacation, buying a new car because yours is the junker among all of your friends, etc.) On the other hand, if most of your friends earn a lot less than you, you will turn into the group’s banker. For example, you’ll find yourself in the pattern of putting your credit card down to pay for dinner and they’ll all say they’ll pay you back later, but 50% of them never do; and they don’t mind taking advantage of you because, after all, you earn a lot more than they do. Or, you and your friends need to pay a deposit for renting a house and they expect you to write the checks because you have the money available and they do not.

The neighborhood that you live in also creates financial pressure to violate the first two financial goals. Your neighbors are likely to become friends (and I’ve already gone over this), but they also influence the size of your home, extent of your landscaping, price of furniture, and the size of your TV. So pay very close attention to the finances of your neighbors – if you don’t like how they are measuring up for first two rules, move somewhere more in alignment with your financial goals. If your family and friends, don’t measure up financially, find some additional people to spend time with that have financial habits that you’d like to emulate and learn from. I have friends with a wide range of income, but it is much more difficult to follow the first two money rules when I am with the extremes from my own income. You’ll just find it easier to reach the next rule when the peer group that you hang out with aligns closer to your economic level.