Kaneil A. Murray, MSc.

K&H Accounting & Consultancy Services

I can’t promise to answer all of them but by knowing your questions before we start I can adjust my presentation

What are Your $ Questions?

Money Management Principles

• Are timeless and time-tested

• Apply to everyone

• Work well in up & down economies

• Help people grow wealthy over time

• Need to be taught in school

Money is an object or record that is

generally accepted as payment for

goods or services or the repayment

of debt in a given socio-economic

context.

What is money?

Go For The Goal

• Goals provide a “why” for saving

• Use goals to develop action plans

• Break goals into benchmarks

• Make your goals SMART

– Specific

– Measurable

– Attainable

– Realistic

– Time-Related

Invest in Your Human Capital

• Get a solid education

– For career satisfaction

– For better health

– For higher lifetime earnings

• It’s OK to borrow for education

– There is an opportunity cost to taking too long to earn degree

– Student loans are better than credit cards

Live Below Your Means

• Spend less than you earn

• Create a spending plan

– Income = Fixed Exp (including savings) + Flexible Exp + 1/12 of Occasional Expense

• Distinguish needs from wants

• “Step-down principle”

• Automate savings so money isn’t spent

10 Money Management Tips

#1: Time is your ally

• Take advantage of the time value of money. A twenty-year-old who invests $4.25/day over fifty years at an 8% average annual investment return can be a millionaire. At age 30, the required amount rises to $300/month. Whatever age you are, start now! Let compounding help you.

10 Money Management Tips Cont’d

#2: Avoid “bad” debt. Use “good” debt sparingly

• A reasonably-sized mortgage and student loans may qualify as “good” debt. Everything else is generally “bad” debt. Be savvy about your borrowing and strive to “pay as you go.”

10 Money Management Tips Cont’d

#3: Distinguish between wants and needs

• The things you “need” to survive are limited. To shrink expenses, scrutinize your “want” list. Avoid the binge-dieter syndrome where you starve yourself by not buying and then go crazy with the credit cards because you’ve denied yourself for so long. If something adds value, buy it if the budget allows.

10 Money Management Tips Cont’d

#4: Never pay full retail

• You can usually get the things you want at a price much less than the first one you see. Shaving a little bit off the many purchases you make adds up to serious money at the end of the month.

10 Money Management Tips Cont’d

#5: Pay attention to fees

• Be aware of the consequences of multiple transactions where little bits of cash are being unnecessarily siphoned off because you haven’t been paying attention.

10 Money Management Tips Cont’d

#6: Develop good financial habits

• Financial success depends on identifying your good and bad habits. Systematically root out the unhelpful habits and replace them with something that moves you closer to success.

10 Money Management Tips Cont’d

#7: Understand your risk tolerance

• Assess your tolerance for investment risk to avoid being shocked by a possible adverse outcome. Take only the risks you are comfortable taking. However, be aware that your ability to accumulate substantial assets over a lifetime is greatly affected by your savings and investment choices.

10 Money Management Tips Cont’d

#8: Continuously educate yourself

• Read every financial periodical, book and blog you can find from well-regarded authors. Get to know smart, honest people who are passionate about personal finance. You will learn a lot.

10 Money Management Tips Cont’d

• #9: Know the role money plays in your life

• What does money mean to you? How does it fit into the dreams and goals you have for your life? Thinking about these topics proactively will enable you to frame your philosophy about money, how you want to accumulate it, and how you want to spend it.

10 Money Management Tips Cont’d#10: Treat it as a game!

• Make it fun. Don’t be a spectator oblivious to what’s going on around you. Every establishment that takes your money is playing the game with you, whether you like it or not. Think back to when you first learned a game that you’re now passionate about. What kind of practice did you need to do to get good at it? What did it feel like to win?