Managing your money is a learned skill. It just isn’t taught very well. We start learning about money from our immediate family. If your parents weren’t very good at managing money, you probably didn’t pick up the good habits you need to get ahead financially.
Unless you set about learning the skills yourself, either by asking questions or learning through bitter experience, you’re probably still wandering around in the dark wondering why you aren’t where you thought you would be by now.
Here are 8 practical money management skills you can learn.
- Learn how to think about money. We all have a relationship with money. It effects every decision we make. This is the longest relationship we’ll ever have, so why not make it a good one.
- Learn how to talk about money. Money is still a taboo subject for many of us. Even couples can find it difficult to talk about. Most couples we work with are still living their parents’ money stories, and they just don’t know how to talk to each other about money and write their own. Who do you talk to about money? Your bank manager? Your closest friend? Are these really the best people to offer advice and help?
- Learn to live within your means. In other words, spend less than you earn. Easier said than done in our world of easy credit, buy now and pay later. Technology makes it easier to spend but it can also make it easier for us to work out what’s coming in and what’s going out, so you can work out if you are living within your means or not.
- Learn how to budget. I know no-one wants to have a budget, just like no one wants to diet. If you want to improve, you need some guidelines – some boundaries to help monitor and change your behaviour. I love having a money plan. It gives me control and choices. Do I always stick to it? Sometimes the unexpected happens. But what I do know is how to get back on track.
- Learn how to prioritise your spending. Understand the difference between a need and a want and how that fits into your money plan and your goals. Have a look at your longer term plans and goals before racing out and buying a new phone – maybe that weekend away is more important.
- Learn how to save. Not just for retirement but for things (and experiences) that you want. Practice delayed gratification. Try saving for Christmas gifts or the ‘special number’ birthday party that you know is coming up, rather than maxing out the credit card and worrying about how to pay for it after the event
- Learn how to save for retirement. Depending on where you are in life, this could be a long way off, or it might be looming and you just aren’t prepared. Wherever you’re at, you should have an idea of how much you need to have tucked away for your retirement. There shouldn’t be any debate here. You need to save for retirement, so just do it! Talk to a certified financial planner, or do some research yourself. Whatever you do, do it now. It’s never too early or late to start.
- Learn how to set goals. If you don’t know where you want to go, none of the points above are going to make sense. Once you know where you want to go, you can plan the route, allow for obstacles, and change your plans if you want to. Life is much less stressful this way.
The good news is, as Money Mentors we can help you learn all of these steps so you can manage your money and get where you want to go!
If you’re struggling with any areas of your financial journey, take the first step: contact us for an obligation free one hour consultation.