In my daily work, a common theme I see is that people generally don’t have a good handle on their money. Money is no longer simple as most transactions are electronic with no physical exchange of cash. This could be part of the problem, however I think it’s more than that. Let me explain…

Money means different things to different people. The common denominator is that everyone uses money.  We all need it, want it, work for it and think about it.  Some say money doesn’t bring you happiness (which I agree with as money is an empty victory), however we all need money even if it’s just for the most basic human needs such as food and shelter.

If money is so important, why is it that it’s the most mismanaged commodity?

I believe it has a lot to do with the psychology and your attitude towards money.

There are 3 types of people I commonly see:

  1. Savers
  2. Spenders
  3. Investors

Savers feel joy and fulfilled when they see their savings account grow.

Spenders live for today and care less about tomorrow.

Investors understand that their actions today will sow the seeds for a fruitful tomorrow.

Which one are you? …What’s your attitude towards money? …And who’s right?

There is no right or wrong answer, except to say that a balanced life provides the most joy.  Live for today but plan for tomorrow… a motto I live by.

If you’re constantly worrying about money, then you need to put pen to paper and understand how much money is coming in each month (and from where) and how much money is going out (and on what).  This is a very powerful exercise and worth doing if you want a good handle on your money management. Why? Because you can’t manage what you don’t know..!!

Living expenses is becoming a huge focus nowadays when applying for finance. Reason for this is that the bank/lender only wants you to take on debt you can afford. In many cases I find that this is the only time when someone actually sits down to consider their daily spend, which is worrying as it’s a critical step if you want to better manage your money and get ahead financially.

My suggestion is to constantly review your cash flow (inflows and outflows) and if you want to really get ahead, project out 12 months so that you know the big ticket items you need to be prepared for. This is a good habit to get into as it allows you to plan ahead as well as to work out how much surplus cash you can invest for your tomorrow.

Hope this gives you food for thought.

Disclaimer: This information does not take into account your individual objectives, financial situation and needs. You should assess whether the information is appropriate for you and seek specialist advice from a suitably qualified and licensed advisor.