How you manage, spend, and invest your money can have a profound impact on your life, yet very few schools teach these important skills. Learning financial savvy can take a while, but the basics are fairly simple and never change.
You were probably taught some basic math growing up, but too many people make it all the way to adulthood without ever learning basic money management. Skills like creating a budget, investing for the future, or even how visa cards work are startlingly rare skills.
The information and knowledge you need to make the right financial decisions is at your fingertips. You simply need to do three things: learn, apply and manage.
Learn the Fundamentals
There is a ton of technical financial information out there, and it takes time to learn what you need to know. The Internet, though, has made this process easier. You will however need to carefully validate the sources of the information you collect before accepting it as true and accurate.
There is a ton of technical financial information out there, and it takes time to learn what you need to know. The Internet, though, has made this process easier. You will however need to carefully validate the sources of the information you collect before accepting it as true and accurate.
Apply Your Knowledge
Knowing that you need to budget and understand your cash flow is one thing, but actually doing it is another.
Knowing that you need to budget and understand your cash flow is one thing, but actually doing it is another.
Start with the basics. You need to track all your money coming in (your total income) and everything going out. Once you know what your money is doing, you can set up a budget to help keep you on track from month to month. From there, you can determine what you’ll contribute to savings and investments.
After you set up the basics, your financial planning needs get more complicated. For example, you might start out by calculating how much money you need in your emergency reserve account, but then realize that you also need to figure out how much to save for retirement.
It’s all about understanding your unique circumstances, applying appropriate strategies and setting up systems to help you stay on track. There’s no right answer—only the answer that works and makes sense for you.
Much of what applying your knowledge looks like in practice is simply taking action and holding yourself accountable. It can help to write out your financial goals and check in with those regularly to remind yourself why you’re working hard to manage your money.
And to make sure you stay on the right track over time, you should set up check-in points periodically throughout the year. For example, you might want to revisit your budget monthly, your investments quarterly, and your overall financial plan annually.
To successfully manage your own money, you need to manage your own behavior. That means taking small, consistent actions over time. You need to create your plan of action and stick with it through market ups and downs, through everything from personal struggles to professional triumphs.
