How Well Do You Manage Your Affairs?
By “Awake!” correspondent in Canada
ALL business, all family matters and all assets require management. So do liabilities. Really, everyone has affairs that must be managed, even if it is just the simple matter of getting through the day. So it is very worth while to stop and ask ourselves, “How well do I manage my affairs?”
When it comes to financial management, or management of assets, we may almost automatically think about the wealthy. The average employee earning a weekly or daily wage may not so readily view himself as a financial manager. This could very well be our first planning error. It is especially the person with limited means who must be a careful manager of affairs. After all, only the wealthy can afford to pay for mismanagement—and it can be very costly!
Home Management
If you are a homeowner, your house probably constitutes your largest single asset. With problems of inflation plaguing all industrial countries and replacement cost of homes spiraling, the value of your house will generally be rising at a rate that keeps pace with, or even exceeds, the rate of inflation. Therefore, the home deserves management priority.
There are always things to do in connection with a home—repairing, replacing, tightening, adjusting, improving, painting, polishing, cutting grass, touching up, cleaning and other jobs unlimited. So the first step in good home management is to make a list of what needs to be done and to establish priorities. How can you get someone to do all the necessary things? And how do you pay for it? Surprisingly, there may be very little that you cannot do yourself—if you are willing to do a little reading and to spend the time needed to finish the tasks. While you may not be able to accomplish everything quite as fast or as well as professionals, you may be able to save considerable money and to enjoy a sense of accomplishment as an added reward.
If time is a problem, make a list of available hours and put it beside your list of jobs. Then determine what things you can do and start the work as soon as possible. It is not wise to put off making needed repairs, as the eventual day of reckoning may be more costly.
Most areas have building-supply stores or home-improvement centers. There, many excellent kits, simple tools, and do-it-yourself ideas are available, often at a reasonable cost. Also, many libraries have a fine selection of literature on repairs, carpentering, concrete work, landscaping and a multitude of problems that accompany home ownership. Even if you have to buy or rent tools, you may find it cheaper to do a job yourself than to have it done professionally.
It would be good to get the family involved in home improvement. The rewards are not limited to financial ones. Family participation also contributes to family unity.
Keeping the house clean is certainly an essential part of the maintenance program, and all can cooperate in this. For example, it may be advisable to adopt the Oriental custom of taking off one’s shoes and putting on slippers when entering the home. Surely, we would not appreciate someone’s walking from the stable into our living room and wiping his shoes on our favorite rug. Yet, when compared with many city streets, the stable may be the cleaner place. Tons of soot, debris, garbage, filth and pollutants are present on most city streets. Why deposit that kind of dirt in your home when this could be avoided simply by removing your shoes?
Management of a house should not ignore home protection. You may have to make decisions regarding insurance. If you now have insurance, how recently have you examined your fire-insurance coverage and any liability and mortgage insurance that you may have? Because of inflation, what was a good coverage a number of years ago may no longer be adequate. When did you last consider the cost of replacing the contents of your home?
Mortgage insurance is really term life insurance. In addition to protecting the home, it is a relatively inexpensive way of creating an “instant estate” in the event of death. For a young couple, it is usually the most inexpensive way of providing financial protection.
If you are working toward a family goal such as a home, you must pay the price. This often means living within the confines of a financial limitation for a considerable time until the goal is reached.
Money Management
Money is another asset that requires management. At times people are heard to say, “I just don’t know where the money went.” Usually this indicates that there was no budget, or there was an impractical, incomplete budget, or a failure to stick to a reasonable budget.
If you have a sound family budget, there is one unalterable rule that will keep you out of trouble. Discipline yourself to live within your means. When spending exceeds income, whether it be on a national or a personal level, the problem quickly compounds itself beyond control, and the result is chaos. Care should be exercised in using credit cards so that a person avoids buying merely what he desires and not what he actually needs. An intelligent adjustment in one’s life-style may be needed for one to be a good manager of finances.
“Save for a rainy day” once was a basic family rule. And it still makes good sense today. For most persons there is no other way to increase one’s assets. And wise investment of savings can offset inflation. For example, if a 22-year-old could save one dollar each day and he arranged to invest it at 10 percent, he would have more than 200,000 dollars at the age of 65.
In good money management, all dormant cash, whether large or small amounts, should be kept working to the best possible advantage. Whether for an individual or for a group, checking accounts bearing little or no interest should hold only funds sufficient for immediate needs. Money that is not needed right away could be put into deposits that produce maximum interest. You do not have to be satisfied with a minimum-return savings account. If you care to negotiate, many banks will pay even slightly more than their advertised interest rates.
Some individuals have preferred to put investment funds into areas that generally do not suffer from inflation, such as revenue-producing real estate, or land. Of course, caution and expertise are required in making such investments. But often they yield greater profits than would a savings account. Furthermore, in most places, interest on cash is subject to income tax, whereas gains on capital investments may not be taxed or may be taxed at a lower rate.
In calculating the return on any investment, it is a serious mistake to disregard the amount of tax involved. If the investment is substantial, the advice of an expert may be needed.
The managing of one’s possessions is becoming more and more complex. No single set of guidelines will cover all the problems. But there is wisdom in learning fundamentals and applying them. It is not easy to follow principles of sound management. But the effort made is well worth it, for good management can affect your future and that of your loved ones.
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Three steps to better home management are: (1) keeping careful record of your finances, (2) family cooperation and (3) learning to make home repairs