Whether you are a student, middle-class socialite or a millionaire, everyone is a few coins away from the level of comfort we desire. Given the merry making that comes with the festive season, the previous month has seen lots of people enter into substantial debt.
Between the gifts, socializing and overspending during the post-Christmas period, which added to the student debt that is eating away your disposable income, you may begin feeling as if everyone else has their finances under control.
The renowned Elizabeth Warren once said, ‘balancing your money is the secret to having enough.’ Of course, it’s easier said than done as most folks live on string budgets month after month, year after year.
Financial management skills are not innate as they are developed over time. Some people are lucky to have parents who teach them basic financial skills. They are accustomed to smart spending, saving and budgeting early, so when they are adults, it’s not an uphill task.
The majority of people, however, only grow to responsibilities that compel them to adjust to proper financial management. Below is a look at what proper money management entails.
We all live by the maxim- spend wisely, but if you are still squandering your earnings before the end of the month without saving a dime, you need to check your financial management skills.
A majority of people don’t put aside a portion of their earnings while a good number of 18-30-year-olds are not saving enough. The fastest way to start saving is to open a savings account with your bank and deposit a particular amount every month. Financial experts advise saving with a purpose as it motivates you to fight the urge to spend money.
Set Financial Goals
Decide what you need your money to do for you- you may be saving for a vacation, to replace your dated wheel or to clear your student debt. Setting financial goals allows you to plan the amount of money you need to save every month.
If you are planning on buying a house by the time you hit 35, obtain information about the sum of money you need and save towards it. It requires lots of discipline to ensure a strong financial position that allows you to reach your targets.
The goals should also be clear and achievable. Most individuals set high financial goals that overwhelm them over time, resulting in abandoned goals.
Make a Realistic Budget
Budgeting is an essential money management skill. You can’t get your finances in check without setting boundaries. Make an analysis of your earnings, expenditure and how much you can save every month while checking whether the budget is aligned with your priorities.
Married people, for example, have different priorities when compared to single folks. It sometimes starts with making a simple grocery list that compels you not to overspend. If you are not sure about whether something is worth buying, ask yourself whether you will need it in the next five years.
Monitor your Credit Report
Credit monitoring is another important money management skill. As such, you have to be on guard on borrowing beyond your ability. Credit monitoring also helps avoid being a victim of identity theft.
Join a Support Network
A support system helps you reach your goals faster. Support networks evaluate their goals, make progress report and corrective actions on any variances identified. They may include family members, friends or classmates. Individuals who include friends fare better when it comes to achieving their goals than those who just think about their ambitions on their own.
Good money management requires you to think like an investor. Financial experts in online markets such as CMC Markets find a way of earning more than the investors invested. An investor who has a portfolio worth £5000, for instance, wants to make ten or more times the amount.
As such, fund managers are tasked with the responsibility of finding ways of expanding the portfolio so as to earn high returns. Similarly, good financial management is about looking for the means to grow your money so as to create a stable financial future.
Mastering any of the skills discussed above sets you up for success in your thirties. Saving is a good way of setting money aside for huge expenses, but it doesn’t mean stripping off all the goodies life has to offer. Enjoy your hard-earned cash once in a while.