Without a sense of money management, you can lack direction when trying to achieve and manage your financial goals. Being organized when managing your finances is incredibly important. It helps you prepare for any setbacks, and it enables you to have a vision, something that you want to achieve financially.
If you constantly get to the end of the month and you realize that you have spent too much, then are you in fact in charge of your finances? Or do your finances control you? Being in charge of your finances means being in control of your expenditures and savings on a month to month basis, which is easier said than done.
So what attributes do you need if you want to be in charge of your finances?
- You need to be well organized, so that you know where you are spending money on a monthly basis
- You need to make sure you are resilient, so that you can deal with any setbacks that you are faced with
- You need to be financially savvy, so that you know you are getting the most out of your finances
Being well organized
For you to be in charge of your finances you have to be well organized and that means creating a budget. Using a budget you can work out how much you are spending from month to month and you can compare this with your earnings. One important thing to remember is that you should never spend more than you earn and by having a budget you can quickly and easily see if this is the case.
By being organized with your finances means that you can also quickly and easily identify where you can save money and cut down on expenses. You can also use your budget figures so that you can set financial objectives. Setting objectives helps to keep you financially motivated so that you can achieve your desired endpoint.
It’s inevitable that when trying to save money, or reduce your debts, that something will come up to cause a momentary setback. Your resilience will help you to analyze the problem and move on from it. It’s also important that you are prepared for when these setbacks occur, for example, having an emergency fund can lessen the blow of any big financial surprises.
Having a financial plan
A financially minded person should always have a plan to get them to where they want to be. Having a plan gives you a sense of direction so you know what you want to achieve and how you want to achieve it. However, you should also be able to change your plan depending on any changes to your circumstances.
Having a plan keeps you focused on what you want to achieve and without a plan you may be disorganized. Set a goal to produce a basic plan of action for 2011 and build on it or make alterations when needed. As long as you have the basics in place, then you are on the right track.