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7 Simple Steps to Improve Your Financial Management Skills

7 Simple Steps to Improve Your Financial Management Skills

Have you ever wondered why our educational system doesn’t teach life skills? I have. I teach communication at the university level, but by the time the students get into my class, their habits are pretty much already formed—and many of them are bad ones.

For example, maybe they saw their parents yell and scream at each other. Or maybe they avoided conflict altogether. These are not good skills to adopt. It’s really sad that they didn’t learn better life skills while they were in school.

Another life skill we weren’t taught in school is how to handle money. Once again, we learn from how our parents handled money. Were they spenders? Were they savers? Did they teach you invest? Did they teach you about the stock market or how to save for retirement? I’m betting the answer is “no” for most of us.

Just because you didn’t learn good financial skills in school doesn’t mean that you can’t learn them now. Here are some tips you can follow to get better at managing money.

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1. Make a budget—and stick to it.

Do you know where all your money goes? Do you know how much money you spend on things like going out to eat, seeing a movie, buying beer, or purchasing clothes? Most people don’t. Are you one of those people who just prays every day that you don’t overdraw your bank account? If so, make your budget. Go back through your checkbook or bank statements for the last year and write down how much you spent in each category. You will probably be surprised at how much of your money is “wasted” on things you weren’t even aware of.

2. Be a conscious consumer.

When you go to the grocery store, do you have a list? Do you look at prices? Do you use coupons? There are many online resources and apps that can help you be more focused on what you are actually spending.

Don’t “sleep walk” through life. Be aware of every single cent you spend! When people don’t do that, their money tends to just evaporate. It takes a bit of effort to look for coupons, make lists, examine the prices at the stores where you shop, but it’s worth it in the long run. And, it makes a BIG difference.

3. Balance your checkbook.

I record everything I purchase. In fact, sometimes my friends make fun of me because I’m always whipping out my checkbook to record everything I spend whether it’s at Target, the gas station, the bowling alley, or pretty much anything else.

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These days, most people just rely on looking at their bank balance online. But if you only do that, then it allows you to not care what you are spending in the moment. But if you hold yourself accountable by recording everything, then you will not over-spend or overdraw your account.

4. Have a plan and a vision.

In order to accomplish anything, you have to have a plan, right? I mean, if you wanted to go to San Francisco but you didn’t have Mapquest or a GPS to calculate your route, you would never get there! Instead, you would just drive aimlessly into nowhere.

That metaphor is pretty much what happens to you when you don’t have a financial plan. You often ask yourself, “Where did that money go?” But if you have a plan and a budget (see #1), then you will know exactly where your money has gone.

5. Think like an investor.

As I said in the introduction, our educational system does not teach us anything about how to handle money—especially when it comes to how to grow it. But think about it. Did the wealthiest people in the world just save $500 a month and leave it at that? Of course not! They learned how to turn that $500 a month into $1,000. Then $10,000. Then $100,000. And so on. You get the point.

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You can’t expect to have a solid financial future if you’re not thinking about how to grow your money. So if you start to think like an investor, you’ll see your nest egg expand.

6. Work together with your partner/spouse on the same financial goals.

If you’re married or in a partnership where you share money, then you need to work together. Since I teach about relationships, I know that one of the biggest conflicts in relationships is money! Frequently, one person will be a saver, and the other will be a spender. This doesn’t work! So it’s important that both you and your partner get on the same page about your financial goals.

Sit down together and make your budget. Meet with a financial adviser so you can learn how to invest your money wisely. But if nothing else, you need to make sure that the two of you have the same goal and vision. And that you actually stick to it!

7. Commit to saving money.

Speaking of sticking to something, commitment is everything. You can’t do anything half-way. You can’t “sometimes” do something and “sometimes not.” You have to be consistent! You have to stay the course!

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It’s kind of like losing weight. If you only occasionally eat less and exercise more, you MIGHT lose some weight. But chances are, you’ll probably just go back to your old habits. So that’s why you need to commit to saving money and building your future. Otherwise, you might as well not even bother!

If our schools taught us these financial skills, then what I have talked about in this article might come naturally to us all. But for most of us, it doesn’t. But it’s not rocket science. It’s just like anything—if you want it badly enough, you will do it! If you want to make your financial situation better you can do it! But you just need to start with the decision to do so.

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Carol Morgan

Dr. Carol Morgan is the owner of HerSideHisSide.com, a communication professor, dating & relationship coach, TV personality, speaker, and author.

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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