Once you've made a commitment to taking personal financial management seriously, you may be on your way to financial freedom if you also make the right investment strategies. There are several different aspects to financial management, including budgeting, saving, managing debt, investing, retirement and estate planning.

Saving Money

Americans sabotage their finances by splurging on meals out and other personal luxury and unnecessary items.  You must find strategies for saving more and spending less.  Trying to save may not be easy at the beginning but once you understand the importance it will become second nature.  You must set aside at least 10% to 15% of your monthly net income.  There are two main reasons:

Investing Wisely

When considering ways to invest your money, you may consider certificates of deposit (CDs), bonds, mutual funds, commodities, stocks, real estate and business ventures.  You should always to consider the risk factor for each type of investment and you want to be sure you hire an expert. You should find interview a few local Certified Financial Planners and select the one you feel the most comfortable with.  Also consider how quickly you will be able to cash out of the investment in case you need the money.

Managing Debt

Most people have some level of debt, home mortgage, car loan, student loan, or credit cards.  The most important is to manage debt so that it does not get out of control.  Controlling your spending and avoiding unnecessary debt in the first place is the best strategy, but if you find yourself struggling with debt or with negative items credit file, you'll need to find solutions and be proactive to get out of debt rapidly.  Debt can be conquered with a variety of methods.  The best way to avoid debt is to avoid using credit cards, establishing a savings plan and only buying what you can afford.  You need to forget about those luxury items such as big screen TVs, be aware of those bait and switch offers who advertise 0% interest and no payment until .... because if you buy and cannot pay it off rapidly you will get behind and will accumulate debts. Credit card companies brainwash us to use credit card because they are easy to use and the repayment of the debt can be repaid into small amounts.  The problem is that credit cards make it too easy for you to be in debt.  Credit cards are the solutions for people who do not want to find other ways to purchase products and services, but the truth is that there are other ways.  If you are in debt, just find a better job or take a second job.

If your credit report is damaged or have erroneous information you will need to dispute those items.  Don't fall for those credit repair scams that promise to repair and remove all your negative items such as bankruptcies, foreclosures, judgments and tax liens.  Nobody can legally remove items that are legitimate.  Those credit repair companies prey on your anxiety, but you can easily dispute errors on your own.  Nolo.com has published a few excellent books on how to repair credit and they even include ready forms. All you have to do is fill in the blanks.  Credit repair companies charge from a few hundreds to thousands of dollars.  You can do the same by investing $20 in a book. The results will probably be better.  If you are in bad shape you may consider contacting a non-profit credit counseling agencies who will assist you in reshaping your financial life.  See How To Find Legitimate Credit Counseling Services.

Retirement Planning

If you haven't already started planning for retirement, there's no better time to start.  The sooner you start the better off you'll be.  Popular retirement plans such as 401(k) plans allow you to put aside money for retirement, while at the same time reducing your current tax bill.  If your employer offers a 401(k), you should contribute as much as you, particularly if your employer matches your contribution. 

IRAs are easy to get, easy to contribute to and easy to save with.  Most Americans can set up an IRA, whether it's a traditional IRA or a Roth IRA, and save on taxes.  Find out more about IRAs from your bank or financial institution or other resources such as Certified Financial Planners.

Review Your Individual Benefit Statement on a regular basis.  Your individual benefit statement shows your total plan benefits and the amount that is vested, or fully owned by you.  To get an individual benefit statement, ask your plan administrator or employer.

Don't Touch Your Retirement Account

Never dip into your retirement savings.  You’ll lose principal and interest, and you may lose tax benefits.  If you change jobs, roll over your savings directly into an IRA or your new employer’s retirement plan. As explained earlier if you have financial challenges either find a better job or get a second job.  You'll be thankful in the future for following that important advice.

Start Now, Set Goals, And Stick To Them

Start saving for retirement as early as possible.  The sooner you start saving, the more time your money has a chance to grow.  Make retirement savings a high priority. Devise a plan, stick to it, and set goals for yourself.  Remember, it’s never too early or too late to start saving.  So start now, whatever your age!

Estate Planning

Estate planning is the process of planning the transfer of all personal assets at death to chosen beneficiaries.  Even if it feels awkward and too early to think about what will happen to your finances when you die, it's a very good idea to take on this planning sooner than later.  Having a will in place will ensure that your property is inherited by the people you choose.  And other estate planning tools such as living trusts can save your inheritors significant tax dollars and attorney and court expenses, not counting all the headaches that comes with probate.

When you are successful managing your money, you gain power over your life. Instead of wondering whether you'll be able to pay your bills or not next month, you'll be able to set priorities and goals, working toward what you wish for and earning satisfaction when you get it.  It all starts with setting up a budget and sticking to it.  You need to save money no matter what.  You need to save for retirement no matter what.  You need to invest your money no matter what. Make your money work for you.  Financial security for you and your family does not just happen, you have to be disciplined, responsible, and the reward will be tremendous.

Most importantly if you have children you need to set the example and teach them at early age the importance of finances.  If you teach them how to be responsible with money they will have a great advantage in life that can't be underestimated.

IMPORTANT:

Personal Savings Drop to The Lowest Level in 74 Years.

People once again spent everything they made and more last year, pushing the personal savings rate to the lowest level since the Great Depression.

The Commerce Department reported that the savings rate for all of last year was a negative 1 percent, which means that not only did consumers spent all the money they earned, but they also dipped into their savings accounts or increased borrowing to finance their purchases.

The savings rate has been negative for an entire year only four times in American history, in 2005 and 2006 and in 1933 and 1932. However, the reasons for the decline in the savings rate were very different during those two periods.

During the Great Depression many Americans had no job and they had to dip into their savings in an effort to meet the basic necessities.

Economists have put forward various reasons to explain the current lack of savings. These range from a feeling on the part of some people that they do not need to save because of the amount of equity they have in their homes and stock portfolios. 

The savings rate is computed by taking the amount of personal income left after taxes are paid, an amount known as disposable income and subtracting the amount of spending.

The Issue of Unexpected Expenses.

Most people who are in financial troubles had an unfortunate event such as, medical emergencies, car related expenses or housing related-expenses.

Most people forget to save money every month to cover such unexpected expenses. 

Overspending.

Most people tend spend too much money in the following 3 areas: food and dining out, entertainment and shopping and personal items.

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