How To Become A Money Manager

by on March 29, 2012

If You Do Not Manage Your Money, It Will Manage You

If it didn’t, you would likely not be reading this. Out of all the managerial positions available in the world, being a manager of your own money is thought to be the most difficult. By the end of this article you will find that managing money is quite easy and at the same time, if done right, you will be able to save and make much more than a manager of anything else does.

You will be able to purchase the significant items you desire, you will be able to save enough so that your children can go to college, and you will be able to assist others by sharing your knowledge so that they can have all that money can buy as well. Most importantly, it is not the making of the money and purchasing of items that will make you happy, it is the art of managing your money that creates happiness. There is no greater feeling when buying a new car, a vacation home, or a trip to Maui then knowing you can afford it and you worked for it.

Become Your Own Money ManagerHowever, it is common knowledge that money management is a two way street and if you do not correctly manage it, you will likely find yourself full of anxiety and stress and a mailbox filled with bills and notices.

Now, instead of waiting until you have time and extra money to start managing your income like most do, it’s best to understand that by managing your money now, you will have 500% more time and 500 times more money in the future. But, before you learn how to become a manager of money, let’s relieve you of any of your negative money management beliefs by looking at the most common myths.

Busting Money Management Myths

Myth: Managing money is too hard

The real issue behind money management is that people believe it to be difficult: a lifelong process, hard work, when really, after making the first breakthrough, it’s all too easy from there. For example, to stay healthy, you may take a vitamin a day. Managing money is similar; all you need is a small daily dose of effort.

Myth: You need a financial advisor

There are a couple points about financial advising that you need to know. The first is that you are fully capable of managing your own money. What you are paying a financial advisor to do is not to teach you how to manage your money, but to hold you accountable for the actions you need to take. If you need the accountability, pay a family member to check up on your money management skills. With this route, you can negotiate a way that you will get your money back.

Myth: Pay off your small debts first

This is not necessarily true. The reason for doing it that way is the appearance of debts diminishing and the feeling you get when you pay off a debt. When it comes down to it, if you are passionate about managing your money, you will find a balance to paying off all of your debts. This also has a positive appearance as well when you can look at all of your debts and know that you only have a little bit more to go on each rather than one large amount on one debt. There is no right way to pay off your debts as long as you pay them, how you do it is optional.

Myth: Don’t use plastic to purchase

You know how the news typically focuses on the negatives and emotional events? Well that is the same mindset of those who enforce this myth. You have only heard that people who use debit and credit cards spend an average of 15% more. The truthfulness is that people are able to spend an extra 15% more because of their money management abilities from using a card. This will be explained further in the following section.

What Managing Money Really Comes Down To

Lists.

And a lot of them.

As you have likely read, one of the first steps to money management is knowing where your money is going and limiting it. The best way to gain this necessary knowledge is to make a cash flow chart. A cash flow chart contains two types of lists, but this is not how to start managing your money.

The first list you need to make is a list of all the reasons you want to manage your money. This will incorporate all the emotions you want to feel, all the goals you want to achieve and any other results you want from managing your money and reaching financial peace. Chances can be extremely slim that you will not be able to manage your money if you do not consistently remind yourself why you are managing it.

Next, the two most important lists you will need is a list of all sources and amounts of income. The second is a list of all forms of expenses. These two lists contribute to your cash flow chart which is the most important source of managing your money.

How you manage it is by creating a fourth list which you can call a spending log. Just as a person who wants to lose weight will keep a food journal, a person who wants to manage their money will keep a spending journal. Referring back to the myth of not using a plastic card, the reason why it is beneficial is that you can quickly view your online checking account and see all the items you have spent money on instead of keeping receipts, which are often forgotten or lost, or writing them down in a journal.

Money Goals: It’s Time To Take A Look At What You Owe And What You Want to Owe

This step of money management is the reason why the concept of managing money has had such a difficult conviction. Cutting habits and saving are the two actions that no one wants to do but are necessary to manage money. In order to do this you will look back at your list of expenses and determine which ones you can eliminate. Now, instead of putting the money you are saving by not spending in the bank, you will use it to pay off the worst sort of expense that may be on your list – debt. Only then can you begin putting money into your savings account or investing it in something that will earn you interest.

Golden Advice: The best money tip you could know to help eliminate debt, lower expenses and save money is to understand the power of negotiation. By knowing how to negotiate with people such as your spouse, you will create priorities and discard anything that is not a necessity while making both you and your partner happy. By negotiating with a salesman, you will certainly pay less than the sticker price. Every money transaction is based off a negotiation of some kind. The amount you will save from negotiating is solely contributed to the amount of effort you put in learning the skill.

Call To Action

After learning how to properly manage money, without a doubt you need to reward yourself! Best of all is that you know exactly how you will reward yourself because of the first list you wrote for motivation. Nevertheless, there is a far more important action to take. The one myth that was saved until now is the myth that money management is taught in school, whether in business class or consumer education. The truth is that the only way for the youth to learn how to manage their money is either from experience (not suggested) or from their influencers (parents, friends, you). School does not teach students how to manage money. The most important call to action is to share your new knowledge of money management and continue to share your experience and lessons, whether it is sharing this pages link, writing your own article, teaching your children, or talking to a friend about it. However successful you are spread your wisdom.

{ 6 comments… read them below or add one }

Andy May 15, 2012 at 5:44 am

At the end most important factor is the amount you saved or invest not the amount earned. Money management is really important and even my self-having issues .Best thing is write down every item you’ve purchased and review it at the end of the day. Then only you’ll get to know the amount you spent for the unnecessary things.

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Pareto FP November 2, 2012 at 10:40 am

I’d agree with Andy, it’s not just about gross income. The ratio of outgoings to income, is more informative as it allows you see where you are going when it comes to managing your money. If you are investing too much then that’s the first step to making a big loss.
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erwin February 23, 2013 at 6:23 am

I agree with your idea mate. If we cannot manage our money, then it will manage you. My understanding is that if we cannot manage our monthly income and expenses, then no matter how great our revenues, at the end of the month we cannot save anything.
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Shalin May 31, 2013 at 1:22 am

Of Course it better than someone else handle your money and you are the master of your investment! I agree with you on this one since I use to write down all my expenses in a book and later checked.
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Shalin July 15, 2013 at 12:23 am

I like this sentence, “if you do not manage your money, it will manage you”. This is so true since money in hand can manage your whole life. But most of the time its not in a good way. One must be able to control & manage earnings + expenses in a daily basis. If you are not comfortable with boo keeping at least use a mobile application to keep track!
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Shajid July 18, 2013 at 10:43 pm

Yes. me too liked the same sentences which salin mentioned in earlier comments if you do not manage your money, it will manage you. Negotiation is a part of managing money isn;t it?

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