Smart money management skills are part of the learn-about-money-so-you-can-protect-your-own-ass(ets) action plan. Learning the mechanics of money management is important. Why? Because you need to increase your money awareness, get clear on your personal finances, and stop the game of financial dishonesty that so many people play.
Money management is about setting goals, finding a balance between income and expenses, tracking expenses, preparing your spending plans and making wise choices.
Smart money management skills provide us with clarity around our money. You know your monthly income and outgo. You know the amount of money you have in the forms of cash, account receivables (money others owe you), savings and investments. You know what you owe in terms of bills, debts and long-term obligations. Smart money management means you know more about your money than you don’t know.
A cash flow statement tells you when to expect cash to flow in and out of your business. A spending plan helps you see and become clear about your spending intentions, thereby giving you more control over your money. When you have a spending plan you’re less likely to do impulse buying. These are the analytical components of managing your money. Find and use the right tools, and perform ongoing analysis to stay on top of your money situation. Make it a routine. By doing so you gain the discipline and confidence that comes from knowing exactly where you stand.
Tools to Use
Set up systems that work for you. Some tools to consider are for maintaining your bank accounts. Use Quicken or Quick Books for your personal and/or business accounting. Consistently use and maintain the tools you decide are best for your needs. Smart money management is about paying your bills before the due date; regularly balancing your bank accounts; auditing your bills monthly — finding the mistakes instead of paying for them; automatically adding to your personal savings, and paying down or paying off your credit cards.
Smart money management is taking the reins of your financial life by pulling up your big-girl/guy pants and taking command. It’s about establishing your own no-BS financial reality. It is knowing that the truth is way better than living in the cobweb of illusion and lies created by not knowing your own bottom line.