There has never been a better time to start managing your money better. So many people are stressed out because of poor money management.
The good news is that this challenge can be easily addressed with the right perspective and good strategy. In his latest book, The 5am Club, Robin Sharma shares ‘The 3 Step Success Formula’ which says when we educate ourselves about something, it leads to better awareness and exposure to new ideas and concepts. This in turn will lead to better decisions and actions which will ultimately lead to better results.
If you find yourself over-indebted and anxious, that’s okay. The only way is forward and your choices and actions will determine what happens next. You need to accept that getting out of debt could be a long process and it will take sacrifice to get out of it. And remember, debt is temporary.
If you want to improve your relationship with money and the state of your finances, here are 3 secrets to master your money. Every good strategy is made up of three fundamental components, understanding where you are, knowing where you would like to be and developing an effective and practical plan to get there.
Know where you are
First, evaluate where you are at this time. Do you know the total sum of your debt and savings? If you are paying off a bond or car, do you know how much you still owe? If you do not I would suggest making a debt list that reflects all your creditors, how much you owe each one, the interest rate you are being charged and how long it would take you to settle it if that’s your intention.
If admin isn’t your thing, a great app that does it all for you is the 22seven app will help you budget, track and invest your money better. It tracks all your accounts simultaneously and updates them allowing you to see how much you owe and own. If this feels like too much knowledge for you, you could make a chart or use a journal to track your progress.
Know where you are going
What does financial success really mean to you? For some individuals it may mean being completely debt free while for others it may mean living within their means and having a manageable level of debt for larger assets. There may even be those of us who want to have a certain amount of funds in the bank to accomplish a life dream like travelling or to prepare for significant life events like a wedding or university tuition for their children.
Take some time to write down the goals and dreams you have that will require money. If you are a visual person, you may want to create a vision board with pictures that represent things that inspire you.
Know how to get there
And finally, it is time for the most important step, how will you get yourself from where you are to where you want to be? To increase your cashflow, you will need to reduce your expenses and or find ways to increase your income. The best place to start would be with your budget.
Your budget is basically a monthly spending plan that lists all your expenses for the period. Where could you cut down and save some money?
The other way to increase your available funds is to find other streams of income. You could explore short-term opportunities like selling some things you no longer need or you could take a long-term approach like upskilling yourself.
Once you have developed your plan, it is time to take action. Review your monthly spending plan each month and track your progress, celebrate small victories such as sticking to your plan or increasing your savings and before you know your savings account will be looking better and better.
In the words of the author Paulo Coelho in his book The Alchemist: “And, when you want something, all the universe conspires in helping you to achieve it.”
The time to start is now…