Importance of Money Management Skills in Everyday Life

Research from 2019 showed that one in three lottery winners lives WORST after winning. Usually, within five years, the millions won are lost and people find themselves in more debt than before.

falling money

This is what happens when you underestimate the importance of money management skills.

But from today, thanks to this post, you will have to worry less about it (and you can win the lottery with peace of mind).


Money Is Important

How you use your money determines your global well-being, so you need to learn how to adopt the right strategies.

We would be lying to ourselves if we claimed that money does not play a major role in our lives. Money IS important.

Money not only allows us to pay for the necessary expenses, such as food or rent but also to heal ourselves, to cope with the unexpected, and to enjoy ourselves for life.

Think about how many times you have experienced or witnessed arguments over money: in the bank, at work, in the family.

Those who say that money is not important often hide behind this excuse for not having to admit that they do not know how to manage it.

I want to teach you how to do it just so that you never have to find yourself in certain situations again, and so can improve your life and your finances.

Personal Finance Management Tips

tips

How do wealthy people know how to organize their expenses well and never run out of money?

Here are 4 practical tips + 1 that you can put into practice right away!

DON’T GET INTO DEBTS. This should be written in capital letters.

I always say that behind the invention of credit cards there is certainly someone who knows a lot about human psychology. Or perhaps the Devil himself. They know very well that we spend emotionally, and accumulating debts with a credit card is an instant. Opt not to use it and prefer debit cards.

  1. Set Financial Goals. We, as human beings, tend to do everything dictated by emotion and then justify it with logic. Money management is no exception. Setting yourself (written!) goals helps to make everything more logical and rational, avoiding impulse costs. You can help yourself with a money chart to make it clearer and easier to follow.
  2. Buy Only What You Can Afford. It does not mean living poorly, but knowing that something is within your means and something else is not, is a way of intelligently managing your money. At this juncture, it is useful to buy with cash rather than paying with a card, not only to make the outgoings more evident, but also because brain neuroimaging studies have shown that the brain suffers when we pay in cash: depriving ourselves of money manually creates a little pain that helps us to make more prudent purchases.
  3. Always Put Something Away. The moments of need, the sudden expenses… anything can happen! Setting something aside every month, reserving it for ‘various and possible’ is a gesture that denotes financial wisdom. Even if it is a few pence to put in the piggy bank: at the end of the year, it could be hundreds of dollars.
  4. Watch Out for Extra Expenses. There are a thousand ways to lose money without realizing it. Unused subscriptions, squandered telephone credit, various fees for services you can do without. Those who know how to manage their money are very careful about them.

“But Where Did I Spend It?”

You don’t realize what you’re really doing with your money until you sit down at your desk and carefully record everything that happens to you throughout the day, including expenses.

So, what you need is just a little time, pen and paper, or your favorite digital support and your willingness to record all the income and expenses that occur monthly. To help you, you may want to keep invoices for the most important expenses.

This will help you to always have all the movements in your portfolio at hand and avoid the surprise effect of the type: “Where is all the money I earned?”.

If it seems like a too boring job, know that if you can’t manage the little, you can forget about managing the much.

This is why lottery winners lose everything in a few years. Having no strategic money management skills, they literally throw them out the window, not having the perception of their actual value.

Suddenly they find themselves with millions of dollars that they don’t have the slightest ability to manage, and amidst waste, gifts, scams, and exaggerated expenses, they eventually find themselves in debt as well.

Mental Well-Being in the First Place happiness

When you know how to manage money, this leads to less anxiety and stress during the day, you sleep better, you are less nervous and worried.

You learn to realize that even if you aren’t rich yet, you often have more money in your pocket than expected at the end of the month.

This gives you joy, satisfaction and increases your self-esteem, all things that lead you to have better thoughts and therefore a better attitude towards life … which also leads you to get more money!

But since you now know how to manage it, this leads you to make it pay even better, maybe you even learn to invest a part of it and here you have even more money … and the cycle goes on and feeds itself.

Within a few years you have paid your debts, put something aside and live as you would not have even believed possible until today.

Money Management Skills – Summary

Learning to manage your finances is of fundamental importance not only for your financial well-being but for your life in general.

The first thing you need to do is free yourself from debt, especially those contracted with credit cards.

Then you have to learn how to write down your expenses, pay in cash, and set savings goals: this will limit the emotional extent of your expenses.

Better management of your personal finances will positively reflect in all other aspects of your life.  Believing is Seeing!

At what level are you with managing your money? Write me a comment!

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