Monday, December 24, 2007
Money is a limited resource. No matter how much we earn, it never seems to be enough. I have never heard anyone complain that they have too much money, it's always either my earnings are not enough or I wish I have more money. So it is not surprising that careful money management is very important especially for people who have a family or need to support someone because if something were to happen to you financially, not only are you affected but also people who depends on you for financial support. We must carefully analyze our financial capabilities to make sure that we are not living beyond our means and to also save for the future since our capacity to earn from our active income greatly diminishes as we grow older.
Most of us may already be unknowingly living beyond the lifestyle our present income can provide. One of the most common culprits is our credit card spending habits. Credit cards are extremely useful and can actually be more beneficial than cash due to perks and privileges like 3% rebates on gas, restaurant and department store purchases. But credit card also provide us with much more purchasing power than our current monthly income can provide, creating an illusion that we are richer than we actually are. And because of this, most will never think twice about eating out every day or buying the latest gadgets and trinkets on a whim. This kind of artificial lifestyle will continue until they finally maxed out their credit cards to the point of what they can only afford to pay is the interest due to the huge debt incurred while living beyond their means.