What qualifies as good money management?

[GoodSteward]

I was raised with the idea that as long as you paid your bills you were good with money. After falling flat on my face I realized there is a lot more to managing money than just being on time with payments to be considered "good."

Some think as long as they are saving a good amount, and are working on retirement they are good at managing money. I think we all know someone who is saving money, but blowing the rest with no budget or real management system.

I personally think to qualify as good with money you need to be:
1. Saving money and saving for retirement(both)
2. Living on a budget and sticking to it (or as much as possible, life happens)
3. Properly managing the account(s) you have with transaction tracking and reconciling. (Program, Checkbook, etc)
4. Paying what you owe and on time.
5. Controls spending on credit cards to avoid rolling debt (if you have any credit cards)
6. Minimal amounts of debt, mainly consumer debt

If you are trying to fix mistakes from the past I still think you are managing money well if you are trying to follow the above the best you can now.

Maybe nobody agree's with me? I'm curious the difference of opinion on this, as I'm sure there will be a lot. haha

[GoodSteward]

I think this is actually important to know because the advice we give is a reflection of what we feel about all this. When we give advice it is usually directing people in the way we feel will make the best outcome, which is another way of saying manage their money good in our view.

[Jluke]

Making your money work for you so it can earn more money.

ensuring that your income exceeds your spending.

minimize debt, but leverage certain debt appropriately.

Save, invest, enjoy.

[LivingAlmostLarge]

I realize I know a lot of people who tell me they aren't in "debt" but actually have a lot of credit card debt. They let it creep up every year on the credit card then when bonus time comes around they "clean the slate".

That's not the way to live!

[bigdaddybus]

Making your money work for you so it can earn more money.

ensuring that your income exceeds your spending.

minimize debt, but leverage certain debt appropriately.

Save, invest, enjoy.

I think the first one on your list is key from going from good money management to excellent management. It was a key aspect I saw lacking from the OP's post.

[Fishindude77]

Living on a budget and sticking to it

When I think "budget", I think about a carefully written plan determining where and how your income will be used. If you have adequate income, are keeping all bills paid, and are stashing some away for retirement, who cares if you follow a strict budget?

[snafu]

If you have adequate income, are keeping all bills paid, and are stashing some away for retirement...

While a great many of us are fortunate to cover those points, the majority have not adjusted their lifestyle to match income, whatever the reason. Minding cash flow or budget is more a roadmap to get you to a planned destination.

[Eagle]

I realize I know a lot of people who tell me they aren't in "debt" but actually have a lot of credit card debt. They let it creep up every year on the credit card then when bonus time comes around they "clean the slate".

That's not the way to live!

Some people I talk to say "We're debt free... Oh except for the credit cards, personal loan, car loans, and house."

I don't think people understand the term sometimes.

[Eagle]

Making your money work for you so it can earn more money.

ensuring that your income exceeds your spending.

minimize debt, but leverage certain debt appropriately.

Save, invest, enjoy.

I like these additions.

Jluke what does it mean to you to minimize debt but leverage certain debt appropriately?

[Eagle]

So...

GoodSteward's original list:
1. Saving money and saving for retirement(both)
2. Living on a budget and sticking to it (or as much as possible, life happens)
3. Properly managing the account(s) you have with transaction tracking and reconciling. (Program, Checkbook, etc)
4. Paying what you owe and on time.
5. Controls spending on credit cards to avoid rolling debt (if you have any credit cards)
6. Minimal amounts of debt, mainly consumer debt

Added JLuke's list:
7. Making your money work for you so it can earn more money.
8. Ensuring that your income exceeds your spending.
9. Minimize debt, but leverage certain debt appropriately.
10. Save, invest, enjoy.

[bigdaddybus]

So...

GoodSteward's original list:
1. Saving money and saving for retirement(both)
2. Living on a budget and sticking to it (or as much as possible, life happens)
3. Properly managing the account(s) you have with transaction tracking and reconciling. (Program, Checkbook, etc)
4. Paying what you owe and on time.
5. Controls spending on credit cards to avoid rolling debt (if you have any credit cards)
6. Minimal amounts of debt, mainly consumer debt

Added JLuke's list:
7. Making your money work for you so it can earn more money.
8. Ensuring that your income exceeds your spending.
9. Minimize debt, but leverage certain debt appropriately.
10. Save, invest, enjoy.

I would agree with this list except #2. I believe if you take care of your retirement and regular savings goals in #1, you really dont need a budget for permission to spend the rest of your income.

[MonkeyMama]

#2 is important.

Everything is important, but I think it's just going to be to the degree that you want to manage your money. If you leave some things out I don't think it's all "required" for good money management. But doesn't mean that it's not an important factor of good money management. I personally want to know where every penny goes and keep a sharp eye on my spending, whether I make $10,000 or $100,000. I do not like wasting money. I want my dollars to stretch. End goal is that we will be able to retire sooner than otherwise.

[Jluke]

I like these additions.

Jluke what does it mean to you to minimize debt but leverage certain debt appropriately?

Minimize debt is just that - don't buy things that are too expensive; pay cash when possible.

Here are my leveraging examples - again not everyone will agree and their circumstances will not be the same as mine:

• 0.9% car loan (paid off) and a 1.9% car loan instead of paying cash
• 0% financing on a HVAC system instead of paying cash upfront
• payoff mortgage
• Future cars will be financed if today's rates stay the same.

disneysteve's examples of using the Parent Plus loans; car loans (accelerated payoff), keeping his mortgage so he can invest.

[MonkeyMama]

Maybe hard to put into words, but I'd also add something like "basic tax knowledge" and/or being able to evaluate all the moving parts of a complex financial decision. Hmmm... Don't be penny wise and pound foolish. Maybe that's the way to put it.

As a tax professional, it is just amazing to me what an edge that gives me when it comes to being efficient with money and stretching dollars further. I'd say that some tax and investment knowledge is important. The more, the better.

[GoodSteward]

Living on a budget and sticking to it

When I think "budget", I think about a carefully written plan determining where and how your income will be used. If you have adequate income, are keeping all bills paid, and are stashing some away for retirement, who cares if you follow a strict budget?

This depends on where you are in life. Typically the farther along, the less the budget needs to be held to so hard. However, personally I think not tracking your money to make sure things are in check is poor management, and feel tracking your money and budgeting go hand in hand. Usually larger income people don't have this mindset due to things not being so close month to month, but that doesn't ake away from this "frivolous" factor I think applies.

I think the first one on your list is key from going from good money management to excellent management. It was a key aspect I saw lacking from the OP's post.

That is good to list separately, but was included in the save for retirement part. Investing and letting your money work for you was implied.