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Wise money management is essential for a balanced, happy life. Financial stress resulting from poor money management skills can affect our capacity to make good decisions, harm our relationships, affect physical and mental health, and ultimately to function well in life. It is no exaggeration to say that poor money management breaks up marriages and breaks down hope. Yet, money management is a skill which can be learned. Even if financial problems are largely the result of just not earning enough income, good money management skills can reduce the stress of these circumstances and provide a bit more mental room to focus on solutions.

Here are six tips for managing your money wisely, which, if applied, will improve the overall quality of your life:

KNOW WHERE YOUR MONEY IS GOING. It is important to stop the financial leakage. We all know what it is like to have our money dribbling away one coin or one note at a time. It is important to pay attention to our spending. It can be very helpful to record all expenditure for a set period of time just so you know where your money is going. Prepare to be shocked; most people have no idea how much money is being lost to unnecessary expenses. Once you know where your money is going, you can curtail unnecessary expenses.

DESIGN A BUDGET THAT WORKS FOR YOU AND STICK TO IT. You can design your own, or get a free budgeting form off the internet. Make sure at least some of your money goes to debt reduction and savings. Create a budget that will meet your financial obligations and if you have to cut down on certain expenditures to live within your budget then do so. Once you remove the stress of financial insufficiency through good money management, you will find you are able to improve your financial circumstances gradually. This is next to impossible when you are overspending.

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Boosting your credit score can save you money. Your credit score is a number based on how well you pay back loans on time, sometimes called a FICO score. The higher the score, the less risky you are. The 3 players are Experian, Equifax and TransUnion.

Your goal is to get above 620. That’s the line for creditors. If you are below 600, banks won’t loan you money. In fact, if your mom knew your credit score was that low, she wouldn’t let you borrow any money, either. If you can get the score above 700, you get low rates. If you can eek out above 760, you can usually get the lowest rates. Perfect score is 850. Average score is 723.

Under the Fair and Accurate Credit Transactions Act, you can obtain one annual free copy of your credit report. For more information visit www.annualcreditreport.com or call 877-322-8228. But you will still have to pay a fee to get your actual score. Huh? They’ll give you your credit history, but the actual number, well, they can charge you $6 for.

Here’s the deal. You can get one free credit report (no credit score number) from each of the 3 reporting agencies listed above. But, you can only do this once a year. So, I spaced my requests out every 4 months instead of getting all 3 at once. That way I can note changes. Just an idea.

Without further ado, here are the top 5 tips for improving your credit score:

1. Pay your bills on time. If you pay late, then your bill shows up in a special area called “Adverse Accounts” and it lists what month you were late and how late you were. Think its OK, it only happened 3 years ago. . .wrong. They keep the list for 7 years. Yes, seven. Paying your bills on time can raise your score as much as 20 points just in one month.
2. Keep you credit card balances low. Maxing out your credit cards can lower your credit score by 70 points.
3. Don’t open any credit cards you don’t need. New accounts lower your credit score by an average of 10 points.
4. Have credit cards. Yes, you must have an installment type loan and its OK. Just pay it on time. If you have no credit cards or no installment loans, you tend to be a higher risk.
5. Closed accounts don’t go away. Believe me. I just checked my credit report and some old stuff is still on there. Real old stuff.

Hope this information helped you get your bills in order.

Stuart
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I write frequently on how to trade but my observations on the markets here I will go back to may days as a broker and give you the view from the dealing room on client behavior and the major reasons traders lost.

I dealt with several thousand traders over 8 years and here are my observations.

This was the late eighties and early nineties and online FOREX brokers of course did not exist, clients behave no differently today as they did then.

Here are the top reasons traders lose with any FOREX broker and that includes online FOREX brokers

1. Methods traded were illogical

The first reason was simply methods did not work as logic they were based upon was not relevant to market movement.

Today, day trading is more popular than ever with online FOREX brokers, but it was around 20 years ago and the same results were obtained which were:

A wipe out of equity in a short time.

Day trading did not work then and it doesn’t work now- Volatility is random in short time frames.

Any support and resistance seen in a daily time frame therefore is useless for trading purposes.

Online FOREX traders just like we did must love day traders lots of commission generated!

As a broker your balance sheet is based upon commission to equity.

You generally assume all clients lose anyway, so if they pay lots of commission while losing all the better.

There were other methods that lost especially the ones that clients bought that promised regular money or an income from trading.

These methods were normally bought tested in hindsight and the trader threw in the towel after a few losses, or was wiped out.

Another group that lost were the ones with complicated methods.

They figured the more complicated a method was the more likely it was to succeed, this of course is totally wrong.

Simple systems work best as there are fewer elements to break.

We had one trader who bought a system which he proudly boasted was based on artificial intelligence and the same technology used by NASA to put a man on the moon

Unfortunately, it did not help him in the market!

2. Discipline

What always struck me was how few clients could trade in a disciplined fashion.

They had jobs where they had to be disciplined everyday, yet in the markets they simply behaved irrationally as soon as a few losses came along.

- They would chop and change methods looking for the perfect one.
- They would revenge trade to catch up losses.
- They would blame the markets and call them stupid

When money is on the line we all know it’s hard to be disciplined, but the emotions that we saw ranged from crying to total despair, including one suicide.

3. Money management

Many clients were good at picking market direction but could never make any money due to poor money management.

This was problem for them not only in cutting loses ( they very often removed stops or never placed them) of course, a small loss soon becomes a big loss, the trader cant take that, then he was handed a loss he had to take.

He would have been better of taking the small loss in the first place.

What surprised me was how few traders could accept big profits.

The bigger the profit became the more they wanted to take it even if their system indicated further gains.

The argument given was:

“you don’t go broke taking a profit”

Of course you do, if profits don’t exceed your inevitable losses.

This was perhaps more important than taking small losses.

Traders I saw could not allow trades run to $10,000 or more, a couple of thousand and they banked.

There are more reasons but they above are the ones that caused most losses and of all the traders I traded less than 1% made money longer term.

In part 2 of this article we will look at different personalities we traded, who won, who lost and the traits of the traders who won.

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