Learning and developing good personal money management skills and habits is the key to being able to both create a wealthy future for yourself and being able to maintain it over the course of your lifetime as well.
It does not matter how bad off or how out of shape your finances might be right now. By changing your attitude and behavior towards your finances and wealth, you can begin to start attracting more and keeping more, little by little, day by day.
Far too often we hear about people who get a large wind fall of money and instead of them living a wealthier life from then on, within a very short time period they end up losing the money and being worse off then they were before they got the money.
The main reason why this happens is due to a lack of good personal money management habits. The good news is that these skills and habits can be learned and with practice, developed to help you take your finances in the direction that you want them to go in, which brings us to an interesting question.
What Are Good Personal Money
Management Skills And Habits ?
They can be defined in many different ways by many different people, however for now we will define them as follows.
“The necessary behaviors or actions to take that allow you to develop the ability to plan and control your income and expenses in a systematic way so that all of your financial obligations will be met and your net-worth will be increasing overtime”.
It does not require that you have a large or specific amount of income to get started. All that is required is that you do have (or will have) some amount of income to work with.
When you have a system in place that you use on a daily and consistant basis you will have a way of controlling your finances instead of being controlled by them.
You will have an increasing confidence in your ability to achieve your financial goals, this is very important if you are serious about accumulating wealth over the course of your lifetime.
Benefits Of Developing Personal
Money Management Habits
Everyone in life has different goals, dreams and aspirations however here are just a few of the many different benefits that most people are able to enjoy as a result of developing these habits :
♦ Freedom From Debt – This is often one of the biggest motivating factors for most people because most people have been trapped in debt for the majority of their adult lives.
♦ Less Stress And Peace Of Mind – Can you imagine how good it will feel being free from debt and having the ability to use your money for what you want to use if for.
♦ Improved Outlook On Life – Most people give up on their goals and dreams in life simply because they do not see how they can be achieved. When you develop good personal money management habits you will be able to see exactly how your goals and dreams can be achieved.
♦ Increased Self Confidence – For most people having all of their bills paid and an increasing amount of money in the bank will allow you to live life with much greater self confidence as a result of knowing that your finances are under control.
♦ More Options In Life – When you have more disposable income to work with you will have more choices about how and where you can spend your free time or off time.
You will not be limited by the amount of money that you are making because you will have the knowledge and ability to make the positive changes that you need to make in order to do what you really want to do.
Why You Need To Develop Good
Personal Money Management Skills
Where you are financially today and where you will be financially in the future is more a result of the decisions and choices that you have made or will make, more so than any other factor within your control.
And in order to attract, have and keep more money in your life, you have to learn the specific behaviors and develop new habits that will allow you to consistently make good decisions about money.
Changing Your Life Through
Better Money Management
The key to attracting more money into your life is to focus more of your thoughts emotions and actions on having the financial freedom that you want.
For many people it helps to visualize the amount of money that they want to have. This can help you improve your attitude and feelings about money.
Once you feel good about being a money magnet or a wealthy person inside, it is now time to start acting like a person with good personal money management skills by taking the steps mentioned below:
♦ Create A Budget
This will be your master plan for managing your finances so that over time you will be saving money, while meeting your financial needs and having money set a side for unexpected expenses while your net-worth is increasing.
It does not need to be very complicated or fancy, you can start with a sheet of paper a list of your current sources of income and a list of all your expenses.
This should include your daily, weekly and monthly expenses. In addition you should also list any quarterly, semi-annual or annual expenses that you may have.
Your next step is to prioritize your list starting with a savings goal. This is the one skill that is absolutely essential to wealth accumulation. If you do not think that you have enough income to pay yourself first, then you are actually living above your means and you must find a way to change this so that you are living within your means.
Saving has to be at the foundation of your wealth building plan. It is the one skill and ability that clearly separates the haves for the have nots. You can start with a tiny amount for one month and gradually increase that amount over time. This will allow you to start developing the habit of saving a portion of your income, however small it is.
After you have determined how much will be set aside for saving or investing then it is time to look at your necessary expenses, This will include things like food, shelter, utilities, transportation, insurance, debt repayments, unexpected expenses (emergency fund for things that break and need to get repaired quickly) large future expenses such as holiday spending, vacations, new appliances, etc, etc…
Once necessary expenses have all been listed you can then include your wish list of things that you would really like to have, these should be things that excite you and motivate you to want to be and do more so that you will also be able to have more of the finer things in life.
The final step of this phase is to prioritize your list making savings your number 1 priority to be taken care of from your income and then moving onward to your necessary expenses and lastly your wish list.
Initially you may not be able to put anything towards your lower priorities, however by following this system and developing good personal money management habits, overtime you will start seeing even your wish-list items becoming attainable for you.
♦ Track and monitor your daily progress – Now that you have a budget plan written out you need to start recording all of your expenses and categorizing them into one of three categories
1.) Savings or Investing,
2.) Necessary Expenses or
3.) Other. This will allow you to make better money allocation decisions in the future.
To get the best results you simply need a specific tool that you plan to use (it could be a notebook or a software program or an money management app) and a way of doing it consistently.
Using your smartphone or a small pocket notebook that you write everything down in can be very helpful in developing this habit of tracking your expenses.
You should also set aside a specific day and time each week to update your budget by adding up your expenses and comparing them to your budgeted amounts. You will then be ready for the next step.
♦ Look for ways to make improvements
You now need to identify where and why you overspent and determine what corrections need to be made ? Did you spend too much due to lack of self discipline or did you budget too little ?
Your next step is to be very proactive and look for ways to get the things that you need, like your necessary expenses at a lower or better price.
Next look for ways to reduce your expenses by making necessary sacrifices and also look for ways to increase your income by doing more than what you are doing now.
Here are three questions that you can use to start identifying opportunities for improvement.
♦ How can I get what I need at a better price ?
Start by calling the companies that you are currently doing business with and ask them how can they lower your cost ? You can also shop around to get a greater value at a lower price, this can be a real winner for you.
♦ What would be a good way to reduce my expenses ?
What generic products like trash bags, paper towel, napkins, etc can you start using instead of the higher priced items ? and what things can you really do without ? things like extra snacks, a night out every week ? This is where reviewing your daily spending log will be the most useful, in helping you identify unnecessary expenses.
♦ What would be a good way to increase my income ?
Start by making a list of things that you are good at, things that other people would be willing to pay for. For example – Working with others, – Organizing things, – Creating things, etc. and look for ways to turn those skills and abilities into an additional income stream. Alternatively, look at new skills that you would be interested in learning to increase your income.
Personal Money Management Summary
The key to creating wealth and enjoying more financial success in your life is to be able to take control of your financial situation, focus and work on making it better. Personal money management is the first and best step towards achieving that goal.
By following all these tips you will have a budget or spending plan in place with a reserve fund for emergencies that you are tracking and adjusting on a regular basis.
This will be a very powerful and effective strategy to help you develop and maintain good personal money management skills and habits necessary for creating and improving your life through better money management. >Read More<☺