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Have you ever wondered why pro athletes, lottery winners, and those who receive large inheritances have often become penniless after a few years with nothing to show for the millions they received? Most of these individuals did not have good money habits or skills; instead, they only knew how to mismanage money. One of the biggest differences between financial success and financial failure is having the knowledge of how to manage money. That is why rich people manage their money well while poor people mismanage their money. Poor people excuse the mismanagement of their money with one of two excuses. Either they will not manage their money because it "restricts" their freedom, or they do not have enough money to manage. The first excuse is not accurate because managing money will lead to your financial freedom, not restrict you. The second excuse does not hold water either because the truth is that if you cannot manage a very small amount of money you will never be able to manage a large amount. The same habits you had with the small amount of money will still be there with the larger sums. It is not that the rich are smarter than poor people; they just have better money habits. Most of us learn our money habits early on through conditioning that we received from our parents or other authority figures in our lives. The conditioning usually happens subconsciously and usually never through an actual teaching session; instead, it occurs through the habits we observed, the words we heard or specific events that affected us. So, if you realize you are not handling your money well, you most likely were programmed to manage money or at least not in a simple and effective manner. The secret to having more money begins with acquiring good habits and skills that lead to effective money management. Once you possess the habits and skills, the money will increase. Here is a simple yet powerful money management system. Open a separate bank account designated for your financial freedom. Put 10% of every dollar you receive after taxes into the financial freedom account. The money is only to be spent for investments - to create passive income. Never spend it - only invest! Once you retire you can then spend the income from your investments to live on, but never spend the principle. This will keep you from being broke and depending on social security, if it is still in existence! The next account you open is a mad money account so that you can have fun with some of your money. It is an account that is equal and opposite to your financial freedom account to help you balance out and have fun doing things you would not normally do. Having this mad money account


will help you to be balanced and stay on your money management track for a life time. However, the spending rule on this account is completely different. Every month you must spend all the money that is in the account and it must be spent in a manner that makes you feel special and rich. Be extravagant! This is your reward for all the hard work and consistency of saving each month into your financial freedom account and never spending it. There are four other accounts that are just as important and should be opened: 10% for the giving, 50% for necessities, 10% for long term savings and 10% for education. Always remember, it is not about how much money you make but how you manage what you have. That is why so many high income professionals live from paycheck to paycheck. They mismanage their money, so master money it or money will master you.

Priscilla Shields is an investor and realtor. She began her career in commercial real estate negotiating for a national retailer, and later began her own company purchasing, rehabbing, leasing and selling properties.

Article Source: http://EzineArticles.com/?expert=Priscilla_Shields

==== ==== For more information about managing your money in digitized formats, including software, please click this link. http://bit.ly/el7HuE ==== ====

Things You Should Know About Money Management  

This is a very informative article about managing your money..

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