5 Ways to Manage Your Personal Finances

Manage Your Personal Finances

 5 Ways to Manage Your Personal Finances

Money can evoke a variety of emotions that are difficult for most of us. This anxiety only grows when we live through difficult economic times or stem from shortages. It can be awkward, uncomfortable, and even scary to deal with these feelings when they arise. But know that it is still possible to make smart and wise decisions that will help you become financially stable.

We've put together writing from our authors on how to build a healthy and kind relationship with money to stay in control of your personal finances.

1) Get rid of your limiting beliefs about money.

According to personal finance author Anne-Lyse Wealth, the first step to achieving wealth is believing that you deserve it. In his article, “How to Build Wealth When You Don't Come From Money,” he writes that establishing a mindset about money is very important. “This means believing that wealth is accessible to you and believing that you are worthy of wealth regardless of the systems designed to keep it away from you. Without that mental drive, other strategies are basically moot," he explained.

Building a mindset about money starts with deliberately reminding yourself of the many resources and opportunities around us. Wealth advice is to remind yourself daily that you deserve wealth. Start paying attention to your negative perspectives about money and start replacing them with more positive perspectives. So slowly, you will learn to expect abundance and reframe your growth-supporting behavior about money.

When you do, you'll be able to apply for jobs, negotiate a salary or ask for a raise, or ask for what you think you deserve at work more clearly and confidently.

2) Take ownership of your money.

We are all likely to encounter unexpected and very costly emergencies in our lives. So how can we feel financially stable while this is happening? In the article, “How I Survived an Unexpected Financial Emergency,” author Alex Hemmer shares several strategies that have helped him manage his money better.

  • Reach out to someone you trust whether it be a family member, significant other, or friend. Even if this person can't solve your problems right away, talking about your stress can help you better understand how you're feeling and form some perspective.
  • Find out the payment plan. Based on specific expenses, check whether you are expected to pay the entire amount up front or whether you can make smaller payments over time. Understand that being financially savvy is not about being debt-free. Instead, it's about learning to manage your spending even if you run into debt along the way.

3) Always set a timeline for your money goals.

Reaching our goals is easier when we set a realistic timeline for achieving them. In the article, "Moving Back Home?" Use This Time to Take Control of Your Finances,” financial expert Bobbi Rebell says that “the more specific you are about what you want to achieve, the easier it is to stick to your goals.”

As a first step, begin by asking yourself whether your timeline is realistic for your current financial situation. Otherwise, you can extend your time or look for ways to make more money (such as through a side hustle).

4) Build an emergency fund.

One of the best ways to start saving is to set aside some money as an emergency fund for incidentals, according to author Kiara Taylor. In her article, “5 Easy Ways to Take Control of Your Personal Finances,” Taylor writes that you should have at least $1,000 in your emergency fund, especially if you've just started saving or are still paying off debt.

Taylor explained that an emergency fund can reduce stress related to money. First, it gives you the psychological security to stay calm during stressful situations such as mass layoffs or global recession. Two, if you have a personal emergency, such as a sudden vehicle repair or surgery, you will have one more thing to worry about. Finally, it will help you develop the discipline to budget regularly and make you more aware of your financial situation.

5) Create a diversified investment portfolio.

When we keep our money in a bank account, its value may be lost over time. The low interest rates that savings accounts offer cannot offset inflation. To deal with this, financial expert Matthew Blume recommends investing. In his article, “Making Smart Investments: A Beginner's Guide,” he writes, “…investing allows you to offset rising costs of living caused by inflation. At a maximum, the main benefit of a long-term investment strategy is the possibility of compound interest, or growth earned on growth.

How do you invest? Blume suggests building a variety of investments to effectively manage your money. A few examples include stocks, bonds, private equity, venture capital, precious metals, commodities and real estate. Diversification helps you manage risk by ensuring that all of your finances are not tied up in one pool. Blume adds, “A well-built portfolio should include several different types of assets (meaning stocks, bonds, etc.) that don't move together. This reduces the volatility of the portfolio without lowering its potential returns.”

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