What does successful handling of money mean? How do you manage to have your finances under control?
If you are looking for orientation and growth in the financial jungle, you have to invest in the right place. This article, how to manage money, is about what money is really about and what basic financial rules you should definitely follow.
We would like to start with a little analogy. There are a bamboo species in China that grows up to 3 meters a day. 3 meters a day is just too much for average tree growth. Bamboo has a second ingenious property that is being extremely robust and very hard to break. Both things are also essential for financial success I.e. Robustness + Growth.
So, what is the secret of bamboo? Its success lies in the preparation for growth. This special bamboo plant only takes care of one thing for three years before growing 3 meters in a day, which is a healthy root system. Until then there is no visible growth and no quick successes.
This is exactly the strategy for making money. To be robust and stable and to grow healthy later. You do not need higher mathematics and complex financial knowledge, but strong financial roots. We’ll take a look at how to manage money and position yourself financially as strongly as bamboo.
The most important rules of success when dealing with money
The first thought when it comes to financing is usually debts, investments and retirement provisions. But none of these points are among the financial roots that make good money and long-term success. The following rules of how to manage money are the basics of success that you should keep in mind before addressing the issues.
1. Saving Your Money
You may be thinking about taxes or inflation now. But this is about a different phenomenon.
The Law of Waste
The law of Waste states that Your expenses always rise to the limits of your income. It means that the more money you have available, the more you spend automatically. Your standard of living will rise with every jump in income. If you are not careful with protecting your money, you will not make any financial progress and will stand empty-handed at some point even with increasing income.
2. Take control of your cash flows
Everyone has different income and expenses. Regular payments, irregular payments, multiple small expenses, monthly payments, annual contributions, credit card payments, and so on. This can result in quickly losing track and control of the investments. But to be financially successful, you have to start at the right spot. You have to control your expenses and track what happens to your money. It is logical but it’s not so easy at first.
3. Provide protection
Life always offers surprises. In financial matters, Murphy’s law can be applied in almost all conditions ‘Anything that can go wrong will go wrong’.
The car will need to be repaired, the medical bills are high, the washing machine fails or the children going on a school trip. If you are not prepared for such unplanned expenses, such expenses will always disrupt your life planning at the moment when it least suits you.
4. Think about your future
In India, future investments are always considered a secondary thing and optional most of the time. Many pensioners slide below the poverty line when they retire. If you don’t make provisions yourself, you definitely have to put a lot of effort into old age.
Imagine that you suddenly had to get by with half your income overnight. Will you be able to survive with that amount of money. At the age of retirement, bad handling of money catches up with you.
5. Live life but according to your Standard
Handling your money well usually sounds like saving money, putting it back and not consuming it. That is somewhat true but only a part of it. Because healthy money managing means taking your daily life into account. Simply accumulating a lot of money makes no sense. Your money should help you live the life you want but at some point in your life. Make yourself aware of what is important in your life and treat yourself only with things that are really necessary for you. Finding the right balance is the key to financial success.
6. Set long-term goals for short-term satisfaction
Being financially successful is a long-term process. Aiming for wealth overnight means hoping for luck. Of course, this is possible, but relying on the factor of luck is not a reliable way and in most cases is built on sand. Thinking long term also means saving on your wishes, rewards or your next vacation and not to have everything right away. This also increases the appreciation of the pleasures and gives you a better feeling of achievement.
Build up your own know-how
The investment with the best return is always an investment in your knowledge. Before you have built up the necessary knowledge, it doesn’t make sense to invest your money anywhere. First, focus on having better control of your finances, putting money aside and gradually becoming more confident about finance.
So, those were the main rules of how to manage money. Don’t be intimidated if you don’t know exactly how to get one or the other point implemented. Do your research and then make a thoughtful decision.
Charles A. Jaffe, the famous chess master one said that It is not your salary that makes you rich, it is your spending habits.