Statistics show that more than half of the world’s population doesn’t know how to manage their money and finances well. Most people know how to work and look for income and money but most of these people doesn’t know how to maximize the potential of their money and let it work to their advantage. The importance of money management skills is unparalleled yet too underrated and unknown. Money management is one of the few keys that may spell the difference between success and failure in one’s life. Successful people are normally people who are in very good control over their finances. Below are some tips on how to successfully manage your finances irregardless of financial status.
1.) Assess your financial status. It is very important to know where you currently stand financially. If you don’t know your current financial status, you can’t find the best solutions to your problems. Do you have existing debt? Do you have health care and insurance? Do you have any savings? Do you have any investments? These are some of the things that you must ponder on first. Make a list and put everything down.
2.) Review your list. Prioritize things in your list and start working on them. If you have an existing debt, the best thing to do is to settle such debt. Debt creates a life of its own because it grows in a compounding way. Settle it first to keep it from growing. Review your cash flow as well. Is your cash flow enough to cover your daily needs as well as your financial obligations? If not, increase your cash flow by finding other sources of income. Doing a business is a good choice. Make sure you make the most out of your spare time.
3.) Learn the basics of building the right financial foundation. Money management is a skill and it requires knowledge as well. Knowing the basics of building the right financial foundation would suffice since it will provide you the information on what things to do in managing your finances. First, consider getting a health care and an insurance. Health care will keep you from spending too much once you get sick and insurance will protect your income generating capacity. Next is to manage your debt. Managing debt means either eliminating it or make it work in your favor. Next is to start investing. Investments need time to grow thus they are intended for long term. Investments can’t be done overnight. And lastly, preserving your estate. Since investments take time to grow, it is very important for you to protect your investments. If something will happen to you or your investments, be sure that your heirs can inherit it at a very minimum cost.
4.) Always be on the hunt for more knowledge. Knowledge is the first key in money management and financial planning. If you don’t know what you’re doing, you are bound to fail. There are a lot of great reading materials online or you can attend seminars regarding financial planning, management, and literacy, or you can even enroll or book yourself for courses related to money management. Knowledge is the best investment that you’ll have.
5.) Keep it simple. Most people think that because most financial problems are complicated, they think that the solution is complicated as well. Financial management is very simple. All you need is to develop discipline, draft a plan, and work it out. Money management is 90% attitude and 10% skill. If you can stop yourself from wasting money, you are on the right path towards great money management. Make a simple management plan for it to be doable and easy to follow and adjust.