Why I choose to manage my Finances?
“Managing finances is too hard, why even bother”. Ever heard that before, I know I have, so many times and the truth be told, people would always have that opinion. Don’t get me wrong, there is nothing wrong with people who feel that way; you know, just winging it when it comes to handling your money, they are good and wonderful people as well. The question I tend to ask them is this, “What are the consequences for choosing that option when it comes to your finances? What if it was not so hard to actually manage your finances?” Well it can be a lot easier, by applying the principles of Financial Management.
Financial management involves planning, monitoring, organizing and controlling of monetary resources of an individual or organization. Managing finances should be done efficiently and effectively in order to accomplish your objectives. The core part of management activities is in planning. Planning is the starting point of all financial management activities and proper planning is critical to success in managing finances.
In order to know how Financial Management can work for you, you need to understand that your financial goals determine your standard of living, and your standard of living is impacted by your lifestyle goals. Your lifestyle goals determine the quality of life you can achieve, the kind of house you would live in, the kind of neighbourhood you can afford to live in, how often you can travel or go on a vacation etc.
Financial goals impact your current financial status and your net worth, which also is a determinant of the amount of capital you have to invest. It also impacts our retirement income. Statistics shows that more than 50% of retires are returning to the workforce and the main reasons are boredom and not having enough money to sustain themselves for the rest of their lives.
As implied earlier, it does not have to be all theory, start by creating your own financial profile. Grab a sheet of paper, list out your total income from all sources; then, list all your expenditure for the month including debts. If you find that at the end of the month, you have nothing left or your balance is in the negative, you are in the danger zone and you would need to cut down on your expenses and/or look for ways to supplement your income. If however you have some money left at the end of the month, save that money for future investments.
This is by no means an easy feat, and you would need to devote time to do this, but you can do it. The earlier you start to apply these principles, the better because trust me as you get older, your needs increase, which means you would need more money to sustain yourself and resorting to taking on debt would be an option for only a limited time before it starts to bite you where it hurts.
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Blessings.