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Introduction
Managing money, personal, family, or invested in a business is significant work in every persons life. In some cases, managing personal finances causes difficulties and subsequent stress, negatively affecting psychological and financial well-being. For this reason, money management skills are of critical importance. This paper includes a review of the article on beliefs about money, which affects life, and an analysis of the authors finances.
Article Review
The authors of the article consider the attitude of people to money and attempt to create Klontz Money Script Inventory (MSI) to evaluate money beliefs. Klontz et al. (2011) note that beliefs significantly determine the behavior of a person with money. At the same time, these beliefs are often unconscious, transmitted in families, develop in childhood, and can cause money disorders (Klontz et al., 2011). Personal well-being depends more not on the amount of money but on the attitude to them and the ability to use them; therefore, the acquisition of money management skills is critical.
The proposed MSI should help identify destructive attitudes that hinder the achievement of financial goals. The authors identified four main behavior patterns based on different beliefs: money avoidance, money worship, money status, and money vigilance (Klontz et al., 2011). There are destructive aspects leading to anxiety or stress in each of these scripts. For example, with avoidance, people believe that they do not merit their money or that money is destructive. With status, self-esteem depends on the amount of money, which causes excessive spending and subsequent problems. Timely detection of a tendency to a particular harmful pattern can help change the attitude to financial issues and improve well-being.
Budgeting Worksheet
Budgeting Analysis
Based on the income and expenses presented, I can analyze my financial situation. My non-negotiables include rent costs and taxes deductible from my wages. My net earnings after paying taxes are $2.932.93, and after paying rent, I have $1.532.93 left at my disposal. Significant waste goes to bad debt the credit card fee is $500, and I do not have good debt yet. Since it is crucial for me to pay bad debt, I cannot reduce its cost, and after paying credit cards, I have $1.032.93 left. My flexible expenses include categories of food and others, the latter covers clothing, entertainment, irregular coffee-to-go, and similar costs. I indicated my maximum possible costs in these areas, and their total amount is $800, but in some months may decrease. As a result of all incomes and expenses, about $230 should remain at my disposal every month.
Highlighting the main points in my expenses, I want to note that payment of rent, food, and credit card bills is a priority. Housing and food provide my basic needs, and paying for loans is necessary since they can cost more in the long run. Planning my budget, I can use the available $200 to create emergency reserves and savings to achieve my goals. I can also review the costs of Others part of them to reduce or redistribute to something that will support my values. My budget plan should therefore extend the table to include planning.
Conclusions
Money management is a critical skill, which will help improve financial well-being and reduce the stress associated with money. Family habits significantly influence behavior with money, and some of them can be harmful. For this reason, people need to determine their attitude toward money and learn how to manage it. Establishing a budget through analysis and prioritization, creating reserves, and paying debts are essential steps.
Reference
Klontz, B., Britt, S. L., & Mentzer, J. (2011). Money beliefs and financial behaviors: Development of the Klontz Money Script Inventory. Journal of Financial Therapy, 2(1), 1-22. Web.
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