To show how very important the issue of proper financial management is, many schools have taken it upon themselves to teach their students how to manage finances. Such course may not be part of the main courses such students are offering, but the school authorities think financial management is everybody’s concern; considering how much this can affect the world as a whole. Such early tutelage in financial management can go a long way in making a better human out of the particular student and make him or her better leader, both in the present and the future. Whether you like it or not, you will have to deal with financial management at some points in your life as you grow older; this is exactly why it is important to gain such knowledge and experience at a considerably young age.
Some highly disturbing data were some of the factors that prompted government to ensure students have an idea of financial management. For one, many American adults in the working class do not have anything like a retirement plan. A study actually showed that only about 45% of the working class individuals in America have retirement plans and are saving towards such plans. This means up to 55% will end up in penury by the time they finally retire. Many of those already retired were only able to save about $25,000 by the time they retired. Some statistics showed that an average American requires about $300,000 to support himself in retirement if he lives the moderate kind of lifestyle. This situation simply means many of them will still be dependants by the time they retire.
Due to poor financial management, many Americans are deeply in debt. According to a research, many American households are living in credit card debts. Some of the debts are as much as $15,000. It is therefore very important for every individual and every household to take the business of financial management very seriously. A sensible individual that does not want to end up in debt and equally want to keep something by for the rainy days of retirement will seek to properly manage his or her finances. For one, make sure you do not spend more than you earn. Always keep something by for savings. Properly plan ahead how much to spend on very important needs like rent and mortgage, household bills, groceries, dining out, gas, emergency medical needs as well as discretionary expenses. As hinted earlier, never forget about putting something by as savings. Some are of the opinion that you should save up to 30% of your monthly income in order not to be dependent in retirement.
While making budget for the particular financial period, create different columns for actual budget and projected budget. The actual budget represents how much is actually spent on one particular item, while the projected budget stands for how much you earlier planned to spend on the same item. In order to properly manage your finances, it is safe to keep the projected amount constant from month to month.