As a financial planner, we would like to share with you a little secret: Everyone has the ability to manage their finances on their own. The knowledge and the information you need to make the right financial decisions is at your fingertips. You just need to take care of three main things: Learn, Apply and Manage. Let’s learn about these in detail.
Learn the Fundamentals
You need to focus your attention on these fundamentals:
- The general principles of financial planning
- Estate planning
If looking at these areas makes you feel overwhelmed, it’s a lot.
Then again, if you look at that list and feel that you know it all, we suggest rethinking on that. No one knows it all; there is always something else to learn.
Over again, the Internet makes finding this information really easier, but there’s a catch. You need to carefully validate the sources of the information you collect, before accepting it as true and accurate. While some financial blogs and podcasts can be exceptionally valuable, others are based on personal experiences of years of education, training, and professional work. Personal stories can help you tune in to your own situation, but they may or may not reflect a comprehensive understanding of finance or relevant rules and regulations.
Apply Your Knowledge
Being aware of your budget and cash flow is one thing, but doing that is another.
How Checking Account Affects Your Mood
Let’s start with the basics here. You need to track your total income and fixed expenses. Once aware of what your money is doing, you can set up a budget to keep a track from month to month. From this onwards, you can determine what you will contribute to the investments and the savings.
After setting up the basics, your financial planning needs may get a bit complicated. You can begin by calculating how much money you need in your emergency reserve account, but then also make sure that you figure out how much you need to save for retirement. Furthermore, expose anyone earning income for various risks, including for any unfortunate disablement, so that you can protect yourself comfortably later.
It is all about realizing your unique circumstances, applying appropriate strategies and introducing systems to help you stay on the right track.
Manage Your Behavior
This is undoubtedly the most challenging part, because feelings often cloud our thinking. When things get demanding, you all get distracted. Other things take up your time, energy, and courtesy, escaping you from handling your finances.
To efficaciously manage your own money, you need to manage your own behavior, which means taking small & consistent actions over time. Create your plan of action and stick with it through the ups and downs, from personal scuffles to professional victories.
Why Work With a Financial Planner Anyway
That being said, it is worth restating that managing your own behavior is the most challenging part of managing your personal finances. Many just cannot do it successfully. Maximum mistakes happen when people proceed from their rational decisions regarding their finances. Hopes, fears, dreams, and other emotions start to sneak in.
It is easier to manage our behavior when we have a freestanding perspective. While we cannot necessarily see the bigger picture when we are deep into it, someone looking in from the outside could be able to help navigate us in the right direction. This is where a professional financial planner can add value.
It is possible to manage your own money, but it is not apparent that everyone can do it effectively. Everything is at ease when you have someone who can help hold your money. A proficient financial planner can help you find achieve more than you could by your own, even if you know the best moves to make.
Get in touch with us today if you are looking for the best financial planners in Melbourne, to get started on educating yourself, applying knowledge and practicing smart and rational behavior around money management.