6 Expert Tips For Managing Your Personal Finances

6 Expert Tips For Managing Your Personal Finances

For many, managing your personal finances can be a headache, often we prefer not to think about our finances, separating our bills, investing, saving or spending, and extra expenses. But if you want to acquire and grow your assets, being a good financial manager is very important. If you do it right, it becomes easier to buy a car or house or get through difficult financial times.

The best part, you don't have to be an expert to be able to manage your finances. For most, it is sufficient to have some accounting skills, the discipline to work on your finances, and a good financial plan. But still, it can be tough to do it right, that's why today we want to give you 6 keys to managing your personal finances.

Use your emotional intelligence

Many of us think that you have to be very smart to become rich and successful and that having a high IQ is corresponding to your success. But the contrary might be true, there are several studies that show that there is little or no relation between the number of assets one can manage and how smart one is. Everyone makes mistakes, even people with high IQs, that is why it is more important to rely on developing emotional intelligence, rather than having a high IQ.

People that develop a high emotional intelligence can turn failures into successes, they know how to manage risks and have a modest lifestyle. Things like this are very important tools to manage your personal finances. Managing your finances is a difficult task, where you need to combine knowledge with multiple skills, and the more info we gather the easier it becomes to know where and when to invest.

Be organized and disciplined

It might come as no surprise that being organized and disciplined is very important to managing your finances. Having a balance sheet with your income, expenses, net worth and debt are very important to keep track of your finances. This way you have a clear overview of all your finances and know where you have to work to get rid of debt and increase your savings. So, being an organized person surely helps to manage your finances, and it's a habit that you can learn. For example, you could create an excel sheet with your monthly budget, like income and expenses, this alone will increase your chances of having your finances organized, now you just need the disciple to manage it regularly.

Have a good Saving plan

Something of most importance in every financial plan is to have a good saving plan. The more you save the more you can invest. Even when the market is going down, a good savings plan will persist and will keep you going even in difficult financial times. One should avoid spending too much when it isn't necessary, and one should have a good balance between investing and saving. Don't get carried away too much when spending, only spend when it is necessary or when it fits your investment plan. There is a reason that you created a plan, so you should follow it.

Before investing, know the risks

Knowing what you are doing when you are investing is very important, that is why it is important to have a lot of information before you make an investment. Knowing the risks and keeping a cool head when the market is going down is a skill that you need to be a good financial manager. You should not panic sell when the market is going down but you should have known that there are risks like this. Knowing risks also helps you make better decisions and will help you create a stronger and better balance sheet.

Stay informed.

If you want to invest in the right things you should always stay informed, you should know when the market is going down, buy, and know when the market is going up, sell. In order to not get into financial trouble, one should manage one's investment correctly and know when to invest and when not. Setting a budget and informing oneself correctly before making an investment is of utmost importance. Just because everyone tells you to invest, or because the investment "sounds” nice is not reason enough to invest. Also, don't listen too much to "influencers" or "internet stars" that promise high rewards. None can predict the future and one should always decide self if the investment is worth it or not. The best way to do it is by getting informed and doing research.

Have a financial plan.

Setting up a flexible yet strong financial plan is key to anyone's success. If you set goals, like buying a house or car, you should have a financial plan that includes how you are going to reach your financial goals. As soon as you have defined your goals, you can make a plan on how you can get there. It will be easier because you know what hurdles you have to overcome, how much you will have to invest, and when you might have reached your goals. Your plan should include your budget and balance sheet, your investments, your debt, and a reasonable plan on what and where you want to invest to increase your assets.

And you, what would you recommend to be a good financial manager? Please let us know in the comments below.

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Hello, my name is Ron Hoekstra, founder of The Liberty OnDemand. I hope you like my content, if you want to know more about me, please read here or subscribe to my newsletter where I will keep you up to date with new posts and other useful content.