Admit it. You’re a fraud.
At least when it comes to managing your money.
I mean, you hardly ever have enough. You’re constantly swiping that plastic card. And your paychecks often vanish faster than a magician can pull a rabbit out of his hat…
WAY before you can cover all of your expenses.
I hate to be Mr. Obvious, but that vanishing act you do with your money isn’t managing. It’s in fact a perfect way to lose total control of your finances. Perhaps it’s time you change who you’re getting financial advice from.
Here is why…
The Importance of Actively Managing Your Money
Managing your money can be stressful, but it’s worth pushing through the inconvenience. Neglecting it or relying on bad advice can cost you years of financial setbacks, and possibly a delayed retirement. Effective money management allows you to…
- pay your bills on time and avoid late fees
- save more and borrow less
- invest to build wealth
- and much more
When you manage your money, you dictate your financial condition, including your financial future. When you don’t, you leave the outcome to chance.
Is it always easy to manage your money? No. But the longer you do it the easier it gets. Like everything else, you get better at it the more you do it. And after a while, it starts working with you in two powerful ways.
- It keeps you better informed – We make better purchasing decision when we’re informed — not just about products, but our own financial state. Active involvement rewards you with honest and accurate insight to your financial condition (income, expenses, debt, surplus, etc.), so you can make better financial decisions with minimal surprises and setbacks.
- It enables you to utilize your resources with greater efficiency — Having accurate insight about your finances can help you better allocate available funds (remember saving and investing?) keeping you on track of your goals.
The importance of managing your money can’t be overstated. It’s a skill we all need to master as millennials to overcome the financial challenges threatening our generation. Consider these underrated tools to beef your efficiency.
5 Financial Management Strategies to Start Utilizing Immediately
#1. Get vision.
Trying to manage your finances without vision is like driving around without a specific destination. Where are you going? Financial vision helps you manage your money better by:
- Helping you paint your future — where do you want to be in 10 years? Pay off that student loan, save for a down payment for a new house, or increase your investing?
Better yet, it helps you sort through for the most urgent tasks at hand by…
- Helping you prioritize — what is most pressing right now? Perhaps knocking out that loan makes more sense for your situation.
Financial vision is one of the most crucial ingredient in managing your finances successfully because everything else flows from there. It gives your finances a purpose and a target. It removes mundaneness from managing your finances by giving meaning to all financial activities you engage in, day in and day out.
If you want to manage your money with more success, you first need to cast a clear financial vision then execute it.
#2. Make a financial plan.
Okay, you know what needs to be done: live below your means, pay off your debt, start saving for the future. But how do you expect to get there?
Hint: make a plan.
A financial plan can help you execute your vision by providing you strategies to make your vision a reality. A solid plan will have the ability to address challenges that might rise up to prevent or discourage you from pursuing your vision.
In addition, a financial plan will keep you grounded, focused, honest, and committed to your vision. But it’s hard to stick to a plan without goals.
#3. Set goals.
A goal makes your dream a reality, your financial desires an achievable plan. Think about it — which is easier, chasing a dream or following a plan?A financial goal help you manage your money better by giving you specific targets (dates and dollar amounts) to put your effort towards.
In addition, goals are a measuring sticks.
They will show you where you are in your journey, whether it’s paying off debt or getting closer that cruise trip you’ve been saving for. Set long-term and short-term financial goals to measure your progress execute your financial plans.
#4. Use a budget!
An effective financial management plan requires a budget. A budget is like a GPS. It guides you turn by turn to your destination — your financial goal.
It’ll show you how much you have (your current location), and where it’s going (your next turn). It will help keep you from overspending (taking a wrong turn).
By incorporating a detailed budget to help you manay your money you’ll ensure you have enough to cover your expenses and address other financial obligations.
Your budget will help you see what portion (or percentages) of your income goes to bills, entertainment, debt, investment, etc. while allowing you to make changes as needed so you can guide your finances more effectively.
PLEASE. Use a budget to help manage your money.
5) Get an accountability partner
I get it. We live in the West. Where people would rather talk about politics, their weight issues, and even their death, than their personal finances. (According to a study done by Wells Fargo).
But, your finances are at a huge disadvantage if you’re neglecting this one tool. For instance, what happens when things get tough- the reality of the process hits and discouragement creeps in and challenges all of your plans?
What happens when you’re buried under the yoke of discouragement by things not going as planned? What about when hopelessness is slowly taking over your thought process and you’re starting to give in? You may start thinking things like, Why do I even try?
In those times, you need an accountability partner to help you sift through the discouragement and remind you of why you set your goals in the first place.
Sure, you can remind yourself of these things on your own, but there’s something about accountability that causes us to reach deeper and run further and longer.
Accountability holds you to a higher standard; use it to give you an edge! Align with a friend to encourage you when you need it and push you when your goal seems to be out of reach.
You Can’t Afford to Not Shape Your Own Finances
The fact is, your current financial condition is the result of how (well or not-so well) you’ve managed your finances in the past.
If it makes you cringe, it’s definitely time to do something about it. Otherwise, you’re already staring at your financial future.
Related Article: How to Revolutionize Your Finances With These 5 Pillars
If you haven’t already, start implementing these tools to get the results you need:
Vision will keep you reminded of your objectives (retirement, down payment for a house, pay off debt, saving, investments, etc.).
A financial plan will assist with strategies to help you carry out your vision.
Your goals will help you measure your progress and make changes as needed.
Creating a budget will help you distribute and allocate resources strategically to maximize your progress. It will also help keep you from overspending (Remember, live below your means).
Having accountability ensures you will be aggressive about doing the things you already know you should be doing.
Money is a power tool with tentacles reaching far and wide, affecting every major area of life — health, emotions, relationships, and even your spiritual life, to a degree.
This, without a doubt, makes managing your finances even more crucial for your well-being. Combine these power tools together to help manage your money like never before.
How important is managing your money? Share your thoughts and don’t forget to join our mailing list.