How to Make Over Your Money

Living in a media-influenced era where everything is "Buy, buy, buy," it's hard not to spend more than you can afford. This is why many Americans are deeply in debt or at best barely getting by with their bills and other living expenses. We spend without thinking about the consequences. Every time a credit card offer comes in the mail we send off for it, especially if it says we're pre-approved. In most cases people don't have a financial portfolio and have no clue as how to invest their money to make it work for them. We all work hard for the money but wouldn't it be great if we could make our money work for us? If you're someone who's facing financial difficulties right now, having your money work for you make seem nearly impossible. It's not necessary to spend your last dime on financial advisors or get rich seminars. Unless you win the lottery, there aren't any get rich quick secrets. Just like everything else, the road to financial freedom takes time, hard work, discipline, and dedication. By following the guidelines below, you'll be able to make over your money and learn how to manage your spending and saving successfully.

First Step-Recognize. The first thing you want to do is find out what your money personality is. Finding out what your money personality is can mean the difference between financial fitness and financial failure. The four basic money types are: Classic Spender, Stuck in the Middle, Overly Cautious, or Not My Problem. Here's the breakdown of these spending types--The classic spender likes to look good and impress others. You're an impulse spender who doesn't worry about not having enough cash because after all, you have tons of credit cards. This type of spender isn't focused on their financial future and often lacks the discipline to set any financial goals. One way to overcome being a classic spender is to take a good look at your spending habits. You can do this by recording your spending habits for a month. After seeing how much money you spend and how much credit card debt you run up in a month's time, you need to set some higher financial goals for yourself and work on changing your spending habits. The stuck in the middlespender isn't concerned with impressing others. This type of spender is concerned with paying their bills on time and even sees saving as important. The thing about this type of spender is they know what they need to do but they often just put away the minimum. With a little more financial planning, this type of spender can learn how to maximize their savings. Learn from others who have invested their money successfully and get some tips from them. The overly cautious spender is very fearful of spending too much. This type of spender is very frugal. While being frugal can be good in some cases, going overboard can hurt your finances in the long run rather than help you. It's important to learn how to take calculated risks. Try investing in government bonds or principal-protected accounts. Lastly, the not my problem spender doesn't see handling their finances as their concern. They wait around for someone else--a friend, a parent, a husband or wife-- to step in and handle their finances for them. Sometimes this type of spender even forgets to pay bills. Ignoring your financial problems will not make them go away. If it's too much for you to handle your own finances then it would be wise to hire a professional to do it for you. Be sure to check their references first and always stay involved. After all, it is your money.

Step Two-Prioritize. Once you know what type of money personality you are, you can learn what steps to take to better manage your money. When it comes to managing your money, it's more about your psychological makeup and personality than how much you know about financial planning. Some red flags in your personality that can negatively effect your finances are procrastinating, overanalyzing, avoidance, or being too careless. Learn what your poor money habits are and then you will be able to take the proper steps towards changing these habits. Put your mind over your money and learn how to think before you spend. Many of the items we buy aren't necessities and that money we would've spent on new shoes or clothes can be put into a savings account. Learn how to shred those many credit card offers you receive in the mail. Most of those pre-approved cards have heavy interest fees attached and many people don't even understand the APR rates. You have to be money smart and not give in to every temptation you get to spend.

Step Three-The Program. This step combines the first two steps into a easy to do program. This program has five parts to it which aren't as hard as they may seem at first. The five things you want to do are:

1. Calculate your expenses. Write down how much you spend a month for your fixed expenses such as housing and car costs. Calculate how much you spend on food, clothes, other bill payments, and also recreational expenses.

2. See how much negative cash flow you have based on what your income is and how much you spend each month. For example, if you earn $1500 a month but you spend $1650, you have a negative cash flow of $150. This is hurting your finances. See which expenses you can cut out so that you get your cash flow back on the positive side.

3. Start saving. Once you get a positive cash flow, work on your savings. It would be a good idea to open up a savings account. Some savings accounts accrue interest annually so be sure to do your research to get the most for your money.

4. Have a plan to boost your income. Think of a small business you can do from home or create a steady stream of freelance work to earn anywhere from an extra few hundred to a few thousand dollars a month. This money can go to paying down some of your debts or you can save it for a rainy day or vacation.

5. Set financial goals for yourself. When you set financial goals, you know where you want your finances to be within a certain time frame and you can make your financial dreams a reality. You'll be amazed at how much money you can save in a year once you start setting financial goals and sticking with them.

Step Four-The Payoff. By following a careful financial plan you will definitely see results. It's not going to be easy and will require you to discipline yourself and possibly rearrange your whole style of spending. If you don't think you can do it on your own, there are many financial planners who will help you get your finances in order. Get into the habit of managing your money properly and it will become second nature to you. After while you will see increase rather than debt and your positive cash flow will be able to work for you. If you work smart, you will be on the road to financial freedom.

Many of us have financial problems, but by following the above guidelines these problems don't have to be permanent. Don't wait until you get into debt before you start planning for your financial future. Things will be much easier if you start having smart money habits before you have money problems. By doing this, you can avoid all of the financial stress of overdue bills, bad credit, and even bankruptcy. You don't have to be a millionaire to live comfortably, you just have to be money smart. There's nothing wrong with picking up those pennies you see on the sidewalk either. You'll be amazed to see how saving change can add up to some nice dollars.