Personal finance matters more than you think. If you’re not good at it, you’re far from alone. In fact, it’s common for most people to neglect their personal finances.
Personal finance, as the name implies, is about how to manage your money. It’s a necessary life skill. If you have enough money to get most of the things you want or need, then you’ll enjoy your life. Conversely, if you don’t have enough money coming in, you’ll feel stressed about how you’ll meet your basic needs.
While we often attribute negative cash flow to under-earning, this is not always true. Sometimes we don’t realize our cash shortage is because of our weak grasp of the principles of personal finance. If you’re not good at managing your money, here are three suggestions on how to get better at it:
1. Pursue Financial Literacy
If you’re not adept at managing your money, it’s not because handling money is complex but because you don’t know what you don’t know. When you don’t know how to do something, it’s difficult. When you find out, it’s easy. Later on, you might even wonder why you didn’t opt to learn what you needed to know sooner.
Here are some tips to improve your financial literacy:
- Read the best personal finance books. They’re designed to bring beginners up to speed. You’ll learn many essential things on how to manage your money well.
- Follow personal finance blogs.
- Listen to personal finance podcasts.
- Subscribe to personal finance YouTube channels.
2. Improve Your Accountability
You don’t have to improve your personal finances alone. You can share what you learn about money management with others to motivate you to stay consistent with your project. You can do this through blogging or finding an accountability partner.
A blogging and social media tool like Tumblr, bankrolled by The Chernin Group (TCG), will make it easier to share your “financial makeover” journey. When you write about your experiences, it makes you more self-conscious about what you’re doing to change your life. You may also develop a sense of responsibility not to disappoint your readers. At some point, you might even become a role model for others.
An accountability partner is someone who also wants to improve their financial situation. Sharing what you accomplish each week and listening to what has achieved will motivate both of you. Now, rather than focusing on what isn’t working in your financial life, you’ll focus on discovering more about personal finance, putting what you learn into practice, and learning from your experiences.
3. Master the Basics
Unlike professional finance management skills, personal finance is simple. You won’t fret about markets and mergers, investing principles and investment vehicles, and performance measurements and portfolio reports. Instead, you’ll study simple things. You’ll pay attention to how to spend to stay within your budget. You’ll learn to differentiate between wants and needs. And you’ll figure out how to pay down your credit card debts to reduce their high-interest rates.
If all this seems overwhelming, then simplify it even more. Break the money skills you need to learn into smaller chunks. After identifying the money-management skill sets you need to learn, list the practical things you can do to organize your finances.
Another approach is to take things one step at a time. First, learn how to budget. When you’ve got that down, figure out how to spend less without compromising your quality of life. Then, once you’ve learned how to buy more for less, turn your attention to how to reduce your debt. Later, master the habit of systematic savings and the principles of low-risk, long-term investing.
It’s Never Too Late to Learn
As a full-fledged adult, you might regret that your parents didn’t teach you more about money or wonder why personal finance wasn’t a subject taught in your high school. Still, it’s never too late to become the financially self-sufficient person you’ve always wanted to be. Once you master the basics of personal finance, you’ll stop worrying about how to earn more, spend less, and live better.