- Basics of Money Management -
Organizing Your Finances by Changing Your Attitude

The basics of money management you need for organizing your finances comes from your attitude and beliefs about money.

Personal money management skills must be built on the understanding that money works for you and not the other way around.

It is your attitude about money that forms the foundation for developing money management skills.

If your money is in control of you instead of the other way around...

You Need a Budget!

At the very root of money management is not what you know about money but what you believe about money. At the very core of personal money management issues are the values and the attitude you bring to it.

Lets start at the beginning. There are three ideas you must understand in order to establish control over your money so you can organize your life.

1. Money is an abstract concept representing value. Value is most often subjectively determined.


2. Money is a resource and not a commodity.


3. You only have as much money as what is left over after all the debts are paid and living expenses are paid for. This is the only money you have. The rest of your money belongs to someone else!

If organizing your finances is important to you the most fundamental of all the basics of money management is examining what you think money is and how you feel about it.

Basics of Money Management #1

What is Money?

Because money is no longer represented by the exchange of physical things such as coins, paper, or even the bartering of goods, many people have difficulty with the concept of money.

Money can be thought of as an abstract concept that represents value placed on goods and services.

What do human beings value? Generally we value our own goods and services so money can also be thought of as a way to calculate the value of the energy that we put into producing goods or service.

In other words money represents value and human energy.

Basics of Money Management #2

Money is a Resource for Living

There is somebody in your life who burns through money at an astounding rate. Everybody knows somebody like that. Hopefully it is not you!

Some people simply think of money as food or gasoline and consume it like any other commodity. In other words they hold the idea that money is a commodity that should be used up.

The idea of money as a commodity is contrary to the very basics of money management and the principles of organizing finances.

When you think of your money as a resource that works for you rather than a commodity to be used up, then your money is working for you and not the other way around. Remember control is the goal and you are the one that should be in control of your money - it should not be in control of you.!

When your money is working for you then you can assign it different jobs to do like pay the rent or buy the groceries or stay in the bank and earn more money.

When organizing your finances you are the boss, but first you must fully understand all the different jobs that you need your money to perform.

A money management worksheet can help you accomplish this.

Basics of Money Management #3

Understanding How Much Money You Have

Thinking about your monthly or annual income as "how much money you have" will not help you with personal money management and you will not gain control of your money.

If you are like most people your income is already earmarked to specific categories so you cannot think of your income as money you have because most of it you will never get - someone else will!

Effective personal money management for organized living requires that you understand the very basics of your money and that is:

You only have as much money as what is left over after all the debts are paid and living expenses are paid for. This is the only money you have. The rest of your money belongs to someone else!

Take a look at these two scenarios.

If your money is in control of you instead of the other way around...

You Need a Budget!

Q - Who makes the most money?

A - Jim

Q Who has the most money?

A - Sally

So the personal money management bottom line is...

Jim makes more money than Sally but because Jim is actually spending more money that Sally he does not have as much money as Sally.

Basics of Money Management

The way that you view your money and the beliefs you have about it are the important to effective personal money management.

In keeping with the major theme of organized living you can start thinking about your money as more "stuff" you have to organize and manage.

Just like organizing your stuff, organizing your finances is only possible if you first understand your money.

So of all the basics of money management the most important thing is to first understand it. That includes understanding where it comes from, where it goes, and how much you have.

This is the absolute key to effective personal money management.

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Personal Budget Software

Here are all the pages on money management for organized living (including this one) offered on this website

Personal Money Management Skills - organized living is not possible without competence in personal money management. The Absolute Basics of Money Management for an organized life. Money Management Advice for Organized Living - Are you in the black or in the red? If you do not know the amounts to enter into each category when sorting your money you need a money management worksheet. Money Management Tips for Organized Living - Minimum requirements for understanding your money and tips to help you control it. Ideas for teaching money management skills to your kids. Family Money Management Advice - ideas to help you gain better control of family money management issues like borrowing and lending to family members. A description of the Envelope Budget System.

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