Most people work hard to make money, but they don’t have the skills to manage their hard earned money. People believe that banks and other financial organizations will manage their money. And, yes financial organizations do manage your investments. These organizations do not manage your day to day transactions though. It is your responsibility to manage those transactions.
You have the sole responsibility to develop your wealth plan. To execute your wealth plan you need to know the basic money management steps. Below are some basic money management steps, which may help you:
Plan.
Develop your goals and objectives. You need to know where you want to be in the future. Do not leave your future to a chance. Write down all your goals in a goal book. Be realistic with your goals though. Goals need to act as motivators, not demotivators. If you set unrealistic goals, they will not have the pull. Properly set goals will pull you towards them. Once you have the goals set, develop plans to achieve every goal. Review your goals regularly to see if you are on track. Goal setting is not a onetime event; it requires continuous work and effort.
Create a budget.
Create your operating budget and money saving plan. Keep track of your spending versus your budget. Make sure that your budget and savings plan support your wealth plan. Remember no one else cares more about your finances than yourself.
Keep good records.
Record all your cash inflows and out flows. It’s difficult to get your finances under control if you don’t understand the basics of good record keeping. Keeping track of your cash flow transactions is very important. I suggest you use a journal (note book) to record all your financial transactions.
Purchase Insurance.
We all have insurances on our cars, homes, etc, but many people don’t insure their biggest asset; which is themselves. Purchase life insurance and critical illness insurance to avoid being hard hit by a financial loss due to an accident or illness. Insurance should be an important part of your wealth plan.
Focus on your plan.
Review your wealth plan regularly to stay on course. I am sure you have heard “out of sight; out of mind”. Print your wealth plan and put it where you can see it daily. You have to be disciplined enough to continuously work on your wealth plan.
Save, Save and Save.
I know it is very hard to save money in these days, but you have to do it. You have to be thinking about your future. You have to force yourself to save money. It is never too late to start saving. Try to live by your needs, not wants. Wants are limitless; we don’t get everything we want in life. So, try to control your wants.
Learn About Finances.
Our schools don’t teach us about financial management. It is up to you to acquire financial knowledge if you want to be financially successful. Get all the information you can about money management. No one can protect you from your own lack of knowledge and bad financial habits.
Try to practice use these steps in your life, and I’m certain you will get control on your financial life.