Home » 5 Solid Strategies for Improving Your Money Management Skills This Year
By ☆ Published: February 3, 2017, 2:00 am

5 Solid Strategies for Improving Your Money Management Skills This Year

Develop the money management skills that will have you adulting financially in no time. Like a boss.

Resolutions are for suckers.

Well, sort of.

The idea of accomplishing specific yearly goals almost always ends up being a pipe dream. There’s a better way.

Rather than setting hard benchmarks that lead to clear win/lose scenarios, try aiming to improve in a more general sense. When you take away the pressure of abject failure, it’s much easier to work towards a better you.

For most of us, that probably includes learning how to better manage our finances.

Money management skills may not be the most important thing you could work on, but it’s probably the most needed. When’s the last time you checked your credit score? Re-filled your emergency fund? Talked to a financial advisor?

Even if you’ve done all these things recently, there’s probably a blind spot somewhere in your financial habits. Here’s how you can spot those weaknesses and address them.

Find your weak points.

Working on your money management skills is like trying to lose weight. You have to know what your weak points are if you want to see success. Are you eating too much or not exercising enough? Knowing where you’re deficient is the only way you can reach your goal.

Personal finance is the same way. You have to investigate what’s going wrong before you can improve anything. Are you spending more than you earn? Are your expenses too high? Are you not saving enough?

Go through your bank and credit card statements for the last couple months and write down how much you’re spending and saving. Divide your expenses into the following categories:

  • Rent/mortgage
  • Healthcare
  • Transportation
  • Groceries
  • Entertainment
  • Debt Payments
  • Utilities
  • Miscellaneous

Seeing your expenses laid out will show where you’re going wrong.

Compare your spending to your income. Are you spending almost 90% of what you earn? Are your loans taking a huge chunk of your income? That might explain why you can’t seem to save for emergencies or retirement.

Before you can work on a solution, you have to figure out what the problem is.

Start small.

Once you’ve identified what’s going wrong, you might be tempted to jump in the deep end. Don’t. Starting too quickly will lead to burnout and exhaustion, even before you’ve reached the one-month mark.

Don’t. Starting too quickly will lead to burnout and exhaustion, even before you’ve reached the one-month mark.

Starting too quickly will lead to burnout and exhaustion, even before you’ve reached the one-month mark.

Start with small, measured changes. For example, if you eat out three times a week, try cutting back to one or two. Then after a month, see if you can dial that back even further.

Going cold turkey might work for some people, but it can backfire for others. Like working out, if you do too much too fast, you might end up injured and less motivated than before.

Changing your financial habits and building better money management skills take time, so be patient with yourself and confident in the direction you’re heading. If you’re putting in consistent work, you’ll get there eventually.

Try different methods.

When you Google “how to budget,” you find millions of search results. Some experts recommend the cash envelope method, while others advocate using a mobile app. Each method has its own proponents who claim that nothing else works as well. In reality, it all depends on the person.

The best budgeting method is the one that works for you — and that you stick to in the long run.

If you’ve failed at budgeting or saving in the past, maybe the method you chose sealed your fate. Try a few different strategies until you find one that works for your personality and tendencies.

Seek outside inspiration.

No matter your financial goal, making the journey with other people is better than going it alone. You can find a community of like-minded people on internet forums, by taking financial classes or even searching on Facebook.

A community can make you feel more supported in your goals. Personal finance is still a taboo amongst many groups of people, so seek the support of strangers if your own loved ones are squeamish about the subject.

Reading finance blogs and books, as well as listening to podcasts, can inspire different ideas and serve as educational tools.

No matter what you’re trying to do, there’s someone out there writing about how they did it.

Track your progress.

When I decided to pay off my student loans quickly, I started blogging about it. I thought I’d feel more committed to my goal if I made it public. That ended up being one of the best decisions I’ve ever made.

I tracked my progress on the blog – celebrating when I made big payments, when my balance got down to four figures and when I made my last payment. My readers supported me throughout my journey, especially when I felt stressed and discouraged.

You don’t have to start a public blog, but it can help to document what you’re doing. A simple notebook or journal – even a private blog that’s password-protected – can work.

Seeing where you’ve been can make you feel better about where you’re going, especially when it starts to feel like a slog.

Money management skills don’t just appear. You need to cultivate them. Make an effort to improve, track your progress, and reap the long-term benefit of better finances.

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5 Solid Strategies for Improving Your Money Management Skills This Year was last modified: January 31st, 2017 by Zina Kumok

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