We spend so much time consciously and unconsciously everyday for our personal hygiene. When we care to achieve something, the discipline of everyday action helps us get there. Learn to grow your hard-earned money by practicing money hygiene. Let’s talk money! Are you in?
In my view, the third pillar of creating desired wealth is the discipline of action. I believe it is the most reliable pillar because it can stand on its own and show some results. I like to call it money hygiene, because it adds some rigour to the discipline.
If you want to check what are all the three pillars of Financial Well-being, check out the article “Three factors for Financial Wellbeing.”
The first pillar is how we set the vision for wealth. Check out more details on vision setting: “How wealthy do you envision to be?“
The second pillar is to be aware of how we perceive money. For more details on this check out the link: “Is Money your friend?“
Process of Money Management:
I think it is essential to recognise and improve the process of managing money, to get the best out of it. When you look at any money management course or book, you will find common items that are key to nurture money.
The process that I use is a framework commonly used to monitor and improve anything continuously. It is called the Plan-Do-Check-Act framework. It is a simple and powerful framework used by small and big businesses alike to improve what they do.
When we put this framework to manage personal finances, we get these set of activities:
Planning a periodic budget: (Plan)
The budget for expenses is the estimated amount you are willing to spend your money for the upcoming period of time. Starting with a monthly frequency is ideal. You could choose a shorter period if you want to track the expenditures more closely. If you don’t know what your budget amount is, then start analysing your current spending. If you wish to save more, then set a realistic yet challenging amount.
Spending consciously: (Do)
The actual spending takes relatively less effort on your part. What needs your attention is to be alert and conscious of your spending compared to the budget you have set. I believe that careful attention helps to bring the required focus if you want to nurture and grow your money.
Tracking money movements: (Check)
I believe that anything measured could be improved. The same goes for money. When you track your expenses, you can analyse them and see where you overspend compared to the budget. It is simple math, and you need not be an accountant to do this. Very often, I find people are intimidated by numbers that stop them from tracking the flow of money. This intimidation holds them back from potential opportunities to grow money.
Take corrective actions: (Act)
The final and most essential step is to take corrective action based on the results from the monthly tracking. If you do not take action, nothing is improved. It simply flows in the same direction as before. When there are expenses that are exceeding the budget, take action to address those.
Actions may include, for example, revisiting the budget when there is not enough money saved, revisiting what expense could be eliminated or reduced, growing more income sources etc.
5 Tips to start managing money effectively:
The process of setting a regular discipline of tracking money could be simpler than you think. Some people start the process and cannot continue through, eventually give up when they don’t see progress. Here are some tips to get started and keep going with the money management efforts
Learn financial literacy:
Start learning about the basics of personal finance. Without spending much, the internet is loaded with information free of cost. You have access to valuable information which would enable you to be more conscious of your money.
If you have specific goals of making a certain return from money, spend a bit more time and resources. Equip to educate yourself on the possible investment options available to you.
Have time-bound financial goals:
Having a time-bound financial goal will help you focus on the intention and give yourself the drive to monitor your money. Some examples of financial goals to set the ball rolling include: Saving for a dream vacation next year, buying a car within two years, buying a house within five years, retiring in 10 years with a stable passive income.
Work towards increasing your income:
People focus on managing their expenses diligently and still unable to make desired progress. Finding ways to increase your source of income is equally important to achieve your financial goals faster. How are you working towards increasing or deepening your skillset to earn more money from your work?
Keep expenses proportionate to your income:
When your income increases and your expenses increase even more, and the net effect might be zero or sometimes negative. We have witnessed colossal celebrities who are make millions of dollars eventually end up bankrupt during their lifetime. It is vital to keep expenses proportional to the income for the time.
Seek help from experts:
If the concept of money overwhelms you, and you are serious about bringing some method to grow your money, seek help! You might know people who have a good sense of money management. It could be your trustable friend or a paid professional. It is worth investing some time, money and resources for a more rewarding outcome.
I hope you find these tips worthwhile to start paying attention to your money!
Reflections:
- What needs your attention in your money hygiene, as discussed in the article?
- How can you be more conscious of money when you are spending it?
- Which of the tips above will help you get started in managing your money?
- Who can you ask for help to manage and grow your money?
