Money Management – You Must Know These 7 Critical Lessons
"The lack of money is the root of all evil" – Mark Twain
I do not know if you agree with Mark Twain or, not. But I can say one thing about you. You are trying hard to manage your money better. Proper Money Management is a very difficult task. The difficulty is higher for beginners. But it is Possible. It is the right time to get started with Money Management. It will keep us financially safe.
Perhaps, you thought about money management before. It takes a strong commitment to achieving the money management goals. While writing this article for you, I wished if somebody is there to guide me about the money management and all in my school life, my money management skills would be better.
Today, I am sharing these 7 Critical Money Management Lessons which I have learned (and still learning) from my personal experience.
This Post is for you, if you:
- Want to plan your finance in right time.
- Want to maximize financial benefits.
- Want to be financially stable at an early stage.
- Want to boost your money management skills up.
Goal Setting – Enhances the Probability of Achieving Them:
Sounds good? Let me brief the idea. The first difference between a financially stable person and a financial success day-dreamer is “Goal Setting”. To be financially stable, you must set your own “personalized financial goals” first. And then you must “plan” to achieve them all step by step.
A Paper and Pen are sufficient to get started. You can always make a better draft of the same with a Digital Note Taking Application like Evernote. It is platform independent. There are some money management myths. Don’t get trapped by them. Listen yourself first. You will get your answer.
Early goal setting is extremely beneficial. It motivates us to reach our goals. Because if you set your goal earlier, then you will probably reduce the time-wasting and get a better chance to follow the correct path to achieve them.
Gratification – Delaying it Can Save Lots of Money:
Gratification is an emotional pleasure usually obtained from the early fulfillment of wishes. Let’s check what Wikipedia says about it:
“Gratification is the pleasurable emotional reaction of happiness in response to a fulfillment of a desire or goal. Gratification, like all emotions, is a motivator of behavior and thus plays a role in the entire range of human social systems.” – Wikipedia.
We all are living in an era of “I need it now”. We are unable to keep patience. This is true for almost anything. Patience does not seem to exist anymore. Check out this Google Books Graph to see the “patience” chart yourself. Patient is going to be extinct even before we know it.
However, if you can delay gratification to some extent, chances are high, that you can save a big for future exactly when you need. These are some examples of what you can do by delaying gratification. You can pay in Cash for big purchases and avoid interests. You can minimize your Credit Card Bills. You can boost your Credit Score and lots more. Practically, this list is endless.
By delaying gratification, you can avoid lots of unnecessary purchases. You should self-deploy something like this rule by R. D. Roth every time you feel the urge to spend something impulsively. You may find that you did not even need that item or, you will forget that item completely. It helps a lot to save money. All it needs to achieve is patience and a strong commitment towards money.
Money Management – A Time Sensitive System:
Money Management is a time-sensitive system. You will reap the rewards of money management on a “First Come, First Serve” basis. Sounds complicated? Well. Let us face it right away. I meant that to reap the best rewards of money management, you must start it early. More earlier, More better. A good money management skill is a God gifted virtue.
You must establish a “balance” between your saving and spending. You should save enough money throughout your life for future. But NOT in the cost of the present. An effective Money Management Strategy does exactly this.
Many people are now investing regularly as a part of their own money management strategies. But most of them wish if they had started investing earlier. Here, the Time-Sensitivity of Money Management comes into play. Investments generally pay off of in terms of Compound Interests. That is why early investment really matters. You should have a tried and tested money management strategy for this.
Here is an example. A boy got a job at the age of 24 and he started investing from that time. Another boy, under the same situation, started investing at the age of 30. Guess what, the first boy got the better ROI. But you must invest “wisely” and as per your own money management strategy to get the reap the best rewards of it.
+ Money Management Top 10 Tips:
1. Be committed.
2. Record each transaction.
3. Maintain a Backup Journal.
4. Use Excel Spreadsheets for Analysis.
5. Note and Rectify your Mistakes.
6. Record transaction at EOD.
7. Don’t Procrastinate.
8. Feel good about money management.
9. Seek and learn new skills.
10. Help others.
Money Tracking – Keep Track of Your Finance as Per Your Budget:
You want the best possible output from money management. Right? You must keep track of your money as per your budget to get it. No matter who you are, you must have a budget as a part of your money management plan. A budget allows you to project your income and expenses on a monthly basis. It also helps you to make sure that you are spending right. You can also track your incomes. It will help you to take right financial decisions.
Having a Budget in your Money Management Plan is crucial to achieve your Financial Goals. For example, suppose you are planning to start your own business after 5 years. You need $10K capital for this. You need to start saving $167 per month from now. Your budget just helps you to do this.
Create your budget with a piece of Paper and a Pen first. Then you can always make it better. I have already shared some important tips to create a successful fiscal budget. It will help your money management plan. You can also use Evernote to take notes and keep things organized. It does not matter what you use to prepare your budget, or, your money management plan. Just take action. Prepare it. Stick to it.
Personal Finance – It is Pretty Easy than You Think:
Beginners of Money Management often think that personal money management is a boring work. Some people also think money management as a time-waster. All of them are right. But only from their own money management point of view. You will feel discouraged about money management sometimes. Don’t worry. Always keep in mind that each and every good habit is difficult at first. But with practices, we make them perfect. The same thing is true about money management since it is a great (and essential too) habit for all of us like you and me.
Right Attitude – You can Do Anything You Set Your Mind To:
Never think that you are bad in money management. Your money management is probably better than many people. Money management can dramatically boost your financial confidence.
Do you ever want to quit your day-job? Travel the world? In just one day? Yes. You can it. Just find a way to achieve it. No financial goal is impossible to achieve. But you should be committed towards money management. If you are a complete beginner, you have already missed some of the opportunities of doing money management properly. But don’t worry. It is never too late to start it. Let your unrecorded finances go. Start with today’s transactions. Start fresh.
Failed Before??? – It’s a Big OK:
Yes. Some of us have had tried to establish a money management system for ourselves before. But perhaps we could not maintain that money management system successfully that time. We have failed to reap the rewards of our money management systems in the past. But trust me, it is absolutely a big OK to fail. I can give you an advice. It is to “Try again in a better way.” Money management is such a vast subject that requires some level of professional qualification and lots more to master it. But we are here discussing about personal money management system. It is comparatively easy to learn, practice and grow to reap the rewards finally. You should read this book to master the money management in a little time.
Never let your internal fear of failure to become an obstacle in your way to money management success. Check out this article by Adam Hagerman. It tells about some people who have made some mistakes about money. But they have fought back to win over it.
Finally, they have managed to be on the top of their money management missions.
There is NO Good Time to start a great habit like money management, rather, bad times become good ones when we start a good thing. So what you are waiting for? Just start your personal money management system today. It will work for you throughout your life. It will help your family to be more financially secured too. If you want to get the reward of money management through your next generations too, do not forget to start teaching them these basic money management skills today.
Check out these Quick Start Steps.
1. Take an A4 Paper and Pen.
2. Jot down all Incomes and Expenses.
3. Verify if all the Expenses are justified.
4. Try to increase your Income.
5. Identify Fixed and Variable Transactions.
6. Make a Budget for next month.
7. Make a Table to Track your Daily Transactions.
8. Be stick to it.
I think you have got the central idea by now. I have a final recommendation for you. It is always trying to Do It Yourself. Because self-help is the best help. You can read several books. You can surf several websites. Doing so will enhance your knowledge. None but you knows better about your money. Obviously, you can manage it best. Never lose your focus. Money management needs active monitoring. So be careful about it. You will learn the tricks quickly. You will fall in love with Money Management.
Good Luck, Friend!
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