Simple Steps to Improve Your Financial Management Skills

Have you ever wondered why our educational system doesn’t teach life skills? I have. I teach communication at the university level, but by the time the students get into my class, their habits are pretty much already formed—and many of them are bad ones.

For example, maybe they saw their parents yell and scream at each other. Or maybe they avoided conflict altogether. These are not good skills to adopt. It’s really sad that they didn’t learn better life skills while they were in school.

Another life skill we weren’t taught in school is how to handle money. Once again, we learn from how our parents handled money. Were they spenders? Were they savers? Did they teach you invest? Did they teach you about the stock market or how to save for retirement? I’m betting the answer is “no” for most of us.

Just because you didn’t learn good financial skills in school doesn’t mean that you can’t learn them now. Here are some tips you can follow to get better at managing money.

1. Make a budget—and stick to it.

Do you know where all your money goes? Do you know how much money you spend on things like going out to eat, seeing a movie, buying beer, or purchasing clothes? Most people don’t. Are you one of those people who just prays every day that you don’t overdraw your bank account? If so, make your budget. Go back through your checkbook or bank statements for the last year and write down how much you spent in each category. You will probably be surprised at how much of your money is “wasted” on things you weren’t even aware of.

2. Be a conscious consumer.

When you go to the grocery store, do you have a list? Do you look at prices? Do you use coupons? There are many online resources and apps that can help you be more focused on what you are actually spending.

Don’t “sleep walk” through life. Be aware of every single cent you spend! When people don’t do that, their money tends to just evaporate. It takes a bit of effort to look for coupons, make lists, examine the prices at the stores where you shop, but it’s worth it in the long run. And, it makes a BIG difference.

3. Balance your checkbook.

I record everything I purchase. In fact, sometimes my friends make fun of me because I’m always whipping out my checkbook to record everything I spend whether it’s at Target, the gas station, the bowling alley, or pretty much anything else.

These days, most people just rely on looking at their bank balance online. But if you only do that, then it allows you to not care what you are spending in the moment. But if you hold yourself accountable by recording everything, then you will not over-spend or overdraw your account.

4. Have a plan and a vision.

In order to accomplish anything, you have to have a plan, right? I mean, if you wanted to go to San Francisco but you didn’t have Mapquest or a GPS to calculate your route, you would never get there! Instead, you would just drive aimlessly into nowhere.

That metaphor is pretty much what happens to you when you don’t have a financial plan. You often ask yourself, “Where did that money go?” But if you have a plan and a budget (see #1), then you will know exactly where your money has gone.

5. Think like an investor.

As I said in the introduction, our educational system does not teach us anything about how to handle money—especially when it comes to how to grow it. But think about it. Did the wealthiest people in the world just save $500 a month and leave it at that? Of course not! They learned how to turn that $500 a month into $1,000. Then $10,000. Then $100,000. And so on. You get the point.

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