Managing money is a battle that almost everyone faces, from retail staff right up to big business. Even some governments seem to struggle to balance their books, and a significant financial crisis can place us all under stress. Most people struggle with the issue of financial control, and it can be an issue that causes friction in relationships and in the workplace. Taking control of financial matters is often intimidating, because it requires a change in thinking and in your attitudes towards money, but it is also a positive step towards personal growth that includes taking responsibility for your actions and practicing self-control, both useful for later stages in your self-development.
Here are 5 ways that you can change how you manage your money.
1: Assess your situation
One of the most important elements of any self-improvement is awareness and knowledge of your current situation. When you are dealing with financial planning, it also makes good economic sense to work out where you stand before you make any changes. Think hard about the money that you are spending, where it is going and how much is being wasted on things that you don’t really need. Some experts advise starting with a statement of your net worth, including lists of money that you owe, and what you currently earn.
Your money will only go so far, and usually there will be certain things that you absolutely have to cover each month, such as mortgages or insurance premiums. The start of any program that involves managing your money is to ensure that you put these important things first in your list of spending plans. Make sure they are always paid out each month before you delegate money to anything else. Since you aren’t yet experienced enough to prioritise automatically, you will have to create a list of everything that needs to be covered.
3: Create a budget
Out of your list of priorities, you can then start to create a financial budget, essentially a series of rules you will create in order to prevent overspending. Set boundaries for your finances by allocating a place for every pound that you receive. Know how you are spending money long before it is spent means that you can’t buy more than you can afford, and gives you total control over your shopping and entertainment bills.
4: Streamline accounts
Are you running several different types of accounts, including some that you haven’t used in years? If you have one for your mortgage, and another for spending, and maybe even a joint account too, you have to cut back in order to take control of your finances. It is hard enough to keep track of money going out of one account, never mind focusing on two, three or even more accounts.
5: Allow for fun
Although you can spend too much upon entertainment, if you leave no money for any type of fun in your life, then you will start to resent the budget, and that will undermine your control. Instead, set aside a small amount each month simply for entertainment.
Hopefully you’ll soon start managing your money more effectively by following the above 5 tips. The key is to keep your financial affairs in tip top shape as best you can.
Related: Read about How Self-Improvement and Self-Discipline Can Go Hand-In-Hand