Managing your money wisely is the best way to make sure you and your family gain financial security. Money management is also extremely important if you own a business. All business owners need to understand how money comes in and goes out of their business-if you ignore budgeting details, your venture might not be successful. There are many similarities between budgeting for yourself and budgeting for your small business. When you understand the basics of money management for yourself, you will be more prepared to set up a budget for your company.

To manage your money wisely, start by setting financial goals and establishing a budget plan to help you achieve those goals. Financial goals are simply statements about things you wish you could afford; for example, you may have a goal to establish an emergency savings fund of $2,000 by the end of the year.

What are your personal financial goals? If you had $2,000, what would you do with it? Would you invest it in your small business? Would you buy a car? Would you make a home improvement?

You will be able to accomplish your goals if you manage your finances and put money aside on a regular basis. The key is to setting financial goals that are Specific, Measurable, Attainable, Realistic, and Trackable (SMART):

Specific
State exactly what you want to achieve, how you're going to do it, and when you want to achieve it. For example:

General Goal Statement:
I want to improve my finances.

Specific Goal Statement:
I want to pay off my credit card bill in 8 months by negotiating a payment plan with my creditor.

Measurable
A financial goal should be measurable so you know when you have achieved it.

General Financial Goal Statement:
I will pay off most of my credit card debt soon.

Measurable Goal Statement:
In the next six months, I will pay three of my five credit card bills in full.

Attainable
Make sure the financial goal is within reasonable reach.

General Goal Statement:
I will save money.

Attainable Goal Statement:
I will save $1,000 in a year by putting aside $3 each day.

Realistic
Is the economic goal realistic for you? Don't ignore your limitations. Your economic goals need to be tasks that you can reasonably accomplish.

General Goal Statement:
By managing my money well, next year I will become a millionaire.

Realistic Goal Statement:
By managing my money well, next year I will be debt free and will have an emergency fund equal to three months of living expenses.

Trackable
Being able to track your progress encourages you to keep going and reach your fiscal goal.

General Fiscal Goal Statement:
I will increase my savings goal every year.

Trackable Statement:
Each year I will save 10 percent more money than the previous year.

If you are SMART about setting financial goals, you will be well on your way to managing your money in a way that will provide financial security for you and your family for years to come.

Copyright © 2006 Accion USA

For more helpful tips about managing your money and to improve your financial literacy, visit Your Money and You http://yourmoney.accion.org