Common Sense With Money

Common sense with money doesn't need any complex math skills. Money sense means thinking about spending and waiting a while before buying things if you're an impulse buyer. Credit is the greatest problem in consumer money planning. The US Federal Reserve reports that consumers owed $2416.5 billion in debt to banks and credit card companies. Common sense with money involves taking a formal look at your finances.

You'll need a few items to do the evaluation, including; 

• Calculator
• Copies of paycheck
• Copies of bank statements
• Copies of credit card bills

1. Spend only what you earn. This appears to be a common sense money mantra, but too many people spend and think about what they earn later, if at all. Use your paychecks, bank statements and credit card bill to add up the money coming in and the money going out. Figure out how much you can use from your incoming money to pay off any outstanding debts, even if it's just a little bit of cash put to the debt each month. 
2. Make lists. Lists for what you spend and lists for what you owe help put your economic perspective into an easily organized view. Use your notes from the list of the money going in and out to create lists of what you must spend on each month. Look over what money is coming in and divide that amount among the debts. If you plan on selling something for extra cash, do it sooner so that your interest rate doesn't continue to climb. List making helps to plan for a weekly, monthly and yearly money program. 
3. Save for special purchases. Rather than putting special purchases, such as a television set or sound system, on a credit card, set aside money each month for the purchase. If you really want the item, you'll be more motivated to save more on purchases you may not need each month to buy the bigger ticket item. 
4. Pay off your highest interest loans first. Interest at fourteen to 40 percent on a debt is a common sense budget killer. Get rid of interest payments and you can buy tons of things. Using your figures of incoming and outgoing bucks for the month and your lists, isolate the debt you have with the highest interest and put any extra cash you have each month to pay the high interest debts off. 
5. Don't buy on impulse. Keep your mad money in your wallet to practice common sense with money. If you use cash, carry only what you need. This will limit your mad money and impulse purchases. If you carry a charge card, select one for your daily use that has a limit within your budget. Keep other cards in a safe deposit box for real emergency use. 
6. Reign in your "needs." "I need it" and "I must have it." Common sense with money means you must limit these kinds of statements when you buy like a maniac. 
7. Start a savings account for emergencies. After you've put some extra bucks, even a buck or two, onto your highest interest debt, add a buck or two each month to a savings account for emergencies. Common sense money planning involves protecting yourself against emergencies. Health disasters, illnesses, even a broken leg or a car accident can mean economic doom. More folks went bankrupt in the United States due to medical illnesses than any other cause, according to CNN. According to the news agency, more than 60 percent of the 1.5 million Americans who declared bankruptcy in 2008 did so due to health costs. Puts some bucks aside, any money you can, for disasters.