You Can Laugh at Money Worries with These 7 Simple Skills

Personal finance and business finance are based on the same principles - only the scale is different. Let's see how business control their finances and apply it to your finances with 7 simple skills.

Skill #1. Learn Where Your Money Goes (Business controls its spending)

This skill is a very easy one to master, all it needs a little discipline. Just get a little diary, keep it with at all times and enter each spending transaction into it for a whole month. Do not leave anything out. Every coffee bought while you were out, every bought work lunch, every magazine and every item of clothing. Look at it and see where your funds are really going. Then think what you could have done without. If it was a work-day Starbuck's Coffee (say $5) - that's worth $1,000 per year! What you could you do with that? That's a short resort holiday or you could put it aside for emergencies.

Once you have the months' spending list, then group the items into categories. You could use Food, Clothing, Transport, Rent/House Payments, Medical and Car Payments etc.

Skill #2. Learn How Much You Really Have to Spend (Business knows what it has available to spend)

This is a little harder - but not much. List out your take-home pay (total income less taxes). Then take off your monthly payments such as house/rent, car, life insurance, credit card and medical insurance. The balance should be what is left to spend.

Skill #3. Learn How to Set Savings Goals (Business sets targets)

Once you have mastered Skills #1 and #2 it's time to sit down and think about what you really need to save for. Is it the kid's education? Is it a holiday for the family or yourself? Is it to set some money aside for retirement? Or, is it to replace the car, furniture or washing machine?

Look at your results in Skills #1 and #2. How much do you have left after taking your spending from your income? Is there anything left over? What happens if there was a spending emergency? What would happen if there was a major car repair cost? What happens if your fridge or washer dies? You need to set aside something each month to cover these events.