How to learn to manage money

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Many people dream of becoming rich and never having to work, but few dreams come true.

But it is possible to approach the dream of financial freedom from the other side – to learn how to manage money and achieve financial goals. This financial dream comes true much more often because there are many principles and rules for managing finances. Let’s talk about them.
To achieve financial dreams, it is enough to be prudent and careful in all matters related to money. Managing your personal finances essentially means controlling your spending, planning for the future and investing wisely.

How to manage your money


Based on the most popular advice of successful investors, we can formulate the golden rules for managing personal finances:

Spend less than you earn
Save. Save slowly but steadily
Prioritize your financial goals
Do not get into debt
Insure your risks
These are basic principles of financial success that can be used not only for personal financial management, but also for managing the finances of a business. Let’s now go into each one in a little more detail.

Analyze your feelings about money


We are all used to measuring money in numbers or percentages. But it’s a little more complicated than that. Money is colored emotionally. We all have a different attitude towards it. So when we talk about money, it’s not enough to have a calculator, we also need to listen to our feelings. If you’ve never done this before, think about how you feel about money and write down your first 10 associations.

“What you think about money and say to yourself has a big impact on what happens in your life,” says Ellen Rogin, a certified financial planning consultant based in Chicago.

Set financial goals


Have you clarified your mindset about money? Great. It’s time to start planning.

Where do you start managing your money? The answer to this question depends on where you are in terms of your financial knowledge and where you see your financial goals. In other words: Why do you need money, how do you use it, and what problems do you solve with it?

Create a budget


It is important that you spend less than you take in. Balancing income and expenses is difficult if you are not used to keeping a budget. Manage your spending regularly: weekly or even daily. A budget will guide you on the path to your financial goal.

Add up all expenses. Be accurate and careful when counting. Contrary to what almost all newcomers to budgeting believe, it is very difficult and inefficient to do this in your head.

Break down expenses by category and look at the exact amount you spend per month. There are categories that are hard to predict, like spending on a car or a country home. But it’s entirely possible to analyze them and at least get an idea of the averages.

Now you have solid money management principles in hand, you just need to turn them into habits. It’s not easy, but it’s worth it. You’ll be surprised how much easier it has become to learn financial skills that used to be so difficult.

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