Have you ever wondered what would make you a smarter money manager? No, we do not mean the professionals who can help you manage your investments. We do not mean the financial experts working in the bank.
We are referring to you own ability to manage your personal finances.
Financial management skills are not something you acquire from birth. It has to be developed over time. Some people are lucky enough to be born of parents who practice good financial skills. By growing up with financially responsible parents, they are more likely to inherit the practices of their elders. They will get used to saving, smart spending and budgeting. If you have parents who practiced investing, that is also something that you will be encouraged to start in your youth.
But if your parents are not financially responsible, then you would have no idea how to be a good money manager. While it will admittedly be harder, that does not mean it is impossible to develop the skills that will help you manage your money well. It will take some time to get used to the habits but you can turn your financial life around. You just have to possess the determination and the will to correct the errors are are compromising your financial position.
10 financial tips that will help you with money management
Money management does not require you to have a degree in finance. It can be done as long as you know the right skills and habits to implement. Here are 10 tips that will help you develop the right financial management habits.
Use a financial plan.
Start with a financial plan. There are so many plans that you can use to be a great money manager. You can start with a budget plan. This is actually the most basic of all the plans that you can use. This takes into consideration the relationship between your income and expenses. To be specific, it tells you if your income is enough to support your expenses. Obviously, your expenses should be lower than your income. If it is the other way around, you need to analyze your expenses to make it lower. You have to identify what has to be removed so you will never go beyond your income. Of course, there are other plans like a spending plan or a retirement plan that can really help you manage your limited resources so it goes to your priorities. Use them well to help you manage your finances.
Always have financial goals.
After your financial plans, you need to set financial goals. A goal is a great way to give your life direction. It can help guide your decisions and align all your plans together. Having clear goals can also help you set your priorities. We can sometimes be overwhelmed with all our financial targets. But if you carefully set your goals, you will know what needs your concentration. It will also force you to monitor your finances because you want to make sure that your financial position is strong enough to help you reach your targets. After all, you have to track your progress when it comes to reaching your goals.
Scheduled budget meetings.
Being a good money manager means you have to stay on top of your finances all the time. The most simple way to do this is to have a regular meeting about the budget. If you are married, set a time with your spouse or the whole family. If you are alone, well, you can consult your personal finances on your own. The important thing is to check if your budget is still aligned with your current priorities. Sometimes, as we age, our priorities change as well. You have to make sure your budget will compliment all these changes.
Get the best deal – all the time.
Do not just buy something without doing a bit of research – especially when it is an expensive one. Make sure you conduct price comparisons and online research to make sure that you are getting the best product and the best value for your money. According to AdWeek.com, 81% of shoppers will conduct an online research prior to making a purchase. They will read product reviews or a search engine to find out more about a product. This should be your mindset so you can maximize every purchase. Know where to get the best product, what brand to use and when they go on sale. These techniques can help you save money on purchases that you would have done anyway.
Never shop without a list.
Our consumerist society requires us to purchase basic necessities. You can grow your own produce but there are things that you still need to buy in the grocery, retail stores, etc. If this is inevitable, then it is best for you to just shop with a list. This is the best way to ensure that you will stick to your budget and a great way to review what you have at home before you go on a shopping errand. That is how you can be a smart spender and manager of your money.
Do not forget about seasonal expenses.
One of the mistakes in budgeting is to forget about the seasonal expenses. Sometimes, people focus on the monthly expenses alone. This is a mistake. You have different needs each month. The holiday season increases your expenses exponentially. You need to budget for this. And what about birthday celebrations and anniversaries? You have to allocate money for these expenses. Failing to include this will make your budget fail and that can reflect badly on your money management skills.
Spend with a purpose.
To help you be a good money manager, it is also ideal for you to give every expense a purpose. Ask yourself why you are making this particular expense? Why are you buying this product? Why are you paying for this service? Analyze each and every expense to make sure that it will lead you to your financial goals.
Save with a purpose.
Just like spending, you should also be conscious of your reasons for saving. For spending, it is necessary to help you decide if you should pursue with the expense or not. For saving, it will help motivate you to save your money. After all, it is harder to save than spend. If you know why you are saving your money, it would be easier to fight the natural urge to spend your money.
Monitor your credit report.
One of the activities of a good money manager is credit monitoring. You do not have to be afraid of using credit, however, you have to be vigilant about it. Be on your guard because you have to make sure you will not borrow beyond what you can afford to pay back. Not only that, this monitoring will also help you avoid being a victim of identity theft. At least, you can detect when it happens and you can report it immediately.
Have a support network.
Finally, you have to create a support network to help you be a great money manager. You can compare notes with them and you can also get advice. Beyond that, they can also help you reach your goals. According to a study published at Dominican.edu, those who have goals and sent a weekly progress report to friends ended up being more successful at reaching their goal. This study was done by Gail Matthews – a professor of psychology at Dominican University, California. Those who involved their friends fared better at reaching their goals compared to those who merely thought about it.
2 ways you can make financial management worthwhile
Being a money manager is a win-win situation. There is nothing wrong about it because it can really help you push your finances to the next level. However, there are ways to make it even more worthwhile.
If you want to make financial management more worth it, here are two things that you may want to do on top of the 10 things discussed above.
Give something back.
According to an article published on TheLifeYouCanSave.org, donating to charity can actually help you be a better money manager. If you set a regular schedule for your donations, you will always look at your account to make sure you have the funds to sustain that. Apart from the obvious reasons to feel good about giving back, you will also be motivated to check your accounts all the time. Take note that it does not have to be a big amount. You can give even just a small amount. If you are made aware of the misfortunes of others, you will feel blessed about what you have. Not only that, there is a sense of personal fulfillment knowing that you can make someone else happy regardless of your financial position.
Another way to make money management worthwhile is to find balance in your life. Make sure there is a healthy mix of work and life. Although you may be going for a lot of financial goals, you have to make sure that you give yourself time to relax. This is why it is important to budget for entertainment expenses because you need a break. Save and be a smart spender – but reward yourself every once in awhile. To give you some tips here is a video from Time that provides insight on how you can achieve work-life balance.