It seems like there are loads of personal financial management tips out there telling you all about how to manage money wisely or hacks to for how to manage money effectively. In fact, there is so MUCH information that often you are caught up in information overload. With all that overload it can be hard to know what you should really be doing and how to manage your money wisely.
10 Personal financial management tips for how to manage money wisely
- Have a budget – some kind of plan is better than no plan and a written one is better than a nebulous one in your head. Whatever kind of plan works best for you (remember there is no one right way to budget) but if you want to know how to manage money wisely, you really can’t fail to budget.
- Use technology to support your budget – Using technology means that you can quickly assess your finances on-the-go, so when you want to buy something on the fly you can verify if it fits into your plan or not. I used to be a DIEHARD You Need a Budget fan, but I will tell you that I recently switched to Simplifi for less than half the annual cost and I am HOOKED – read a full review of my favorite budgeting apps here.
- Know what emotional outcomes you want – I talk at length about this here but understanding what you want to feel like will help you far more than setting arbitrary numbers-based goals. Because your core emotional outcomes are unlikely to change you will consistently be working towards the same goal and adjusting your strategies instead of constantly setting new targets AND strategies (which is why people feel like constantly failures with their money!)
- Fix your money mindset – Straight talk here, your mind interprets your reality through a filter of your own making and that filter then creates your thoughts and that creates your reality. So, your mind creates your reality and if you have a skewed belief and relationship with money then all the knowledge in the world will not help you because you will not implement it towards your true goals. Because the numbers are not all you need to learn when wanting to know how to manage money effectively. (P.S. Don’t forget to check out the Attracting Abundance Membership all about using micro changes to shift your money mindset with ease!)
- Separate your bills and your spending – this one piece of advice has been a real game changer for so many (including myself). I recommend this for all my clients, and I do this myself. Use one checking account for all your bills and a separate one for all your discretionary spending (I use mine for groceries, dining out, gas, dog food and entertainment). Set up a recurring transfer each week to this spending account in the amount you want and then you never have to worry that you’ll spend your bill money on Starbucks. You’re welcome!
- Make sure you are protecting your assets – I’m sure you’re aware of life insurance, car insurance, renters/homeowner’s insurance. But one of the most important things you need to insure? Your income. Do you have disability insurance? And yet people often do not protect the most important asset they have – their income. And if you are thinking you won’t ever become permanently disabled…let me be clear. Disability is anything that prevents you from working your job – it could be an accident, pregnancy (I personally funded my parental leave this way), surgery, cancer, unexpected illness, or global pandemic anyone? I paid for years a nominal fee for short-term and long-term disability from my day job employer. I funded a 4 month parental leave in full and lived for 12 months on disability during COVID at almost full pay because my autoimmune condition prevented me from working. I’m not ashamed of any of that. I paid for it, and I used it. I protected my income and as a result I was able to protect my health during COVID-19 and my family did not suffer financially. So yes, if you have people that rely on your income you need life insurance, you need to protect your physical property with car and home or renters insurance. You also need disability insurance to protect your income. You need to get it before you need it, or it won’t pay either – don’t make that mistake.
- Assess insurance annually – Once you have those insurances in place, assess them annually to make sure the coverage amounts are still what you need and that you are paying the best price. It never hurts to shop around as long as you aren’t losing any benefits by doing so. Disability insurance particularly should increase as your income does (since your lifestyle will also likely increase as well).
- Switch up your retirement planning – but don’t go overboard. That old chestnut about needing 1 million at retirement? bullocks! Read more here about why. Start thinking about the life you actually want to lead during retirement, do some pricing and then meet with a fiduciary investment planner to help you fund YOUR dream.
- Stop thinking college is essential for your kids – this whole “college fund” thing? I’m not on that gravy train despite having student loan debt. You know why? College has been sold as this essential thing for ages. But it is less and less relevant depending on your career choice. Unless you need a license for what you want to do, you probably don’t need it. I’m not even remotely making it a requirement for my children. I want them to follow their dreams and if that includes college, so be it and I will help them when the time comes.
- Give yourself a break – you’ve just lived through one of the hardest economic, health and emotional traumas of recent history. Give yourself a break for Pete’s sake. You are doing your best. You are trying you hardest. Nothing in this life remains static and so this season too will pass on to the next. Do what you can today and then tomorrow? Do what you can again. Any progress is good progress as long as you don’t give up.
Personal Financial Management Tips: In Summary
So, there you have it. These 10 tips for how to manage money wisely will have you leaps and bounds ahead of the rest. Most take minutes to set up and will have you feeling more at ease than ever before. These personal finance management tips are nothing that will take you a long time but they will certainly how you on your way to knowing how to manage money effectively