How do you Manage your Finances: A Requisite for Personal Development

By Samuel Sulaiman Bah

Managing your finances is a prerequisite for personal development and growth. Money management skills is also essential for growth, why? because it guides you and gives you an opportunity upon which you are able to understand your financial journey. However, lets have a look at these definitions in order to have a clear picture of the following;

Financial Management: With references to a financial establishment, it deals with the planning, organizing, controlling and protection of all monetary transactions in a business, which at the end will bring increase to the business in maximizing its profits for growth.

Money: On the other hand is a medium of exchange which is generally accepted for the payments of goods and services.

Money Management: This gives one an opportunity to track, monitor and plan their use of capital. It gives us a clear vision on how we can do our budgeting, spending, saving and investing for personal growth, which in turn reflects greatly on how we raise and use our capital.

MAJOR STEPS IN MANAGING YOUR FINANCES FOR PERSONAL DEVELOPMENT

When dealing with our finances, it is essential that we look closely on how we go about it, what we do, how we raise our capital, how we manage it, protect it, spending it, saving it and investing it. It is one of the most significant aspects of our lives, because failing to do so will be detrimental to our personal well being. Here are few of the most significant requisite for managing your finances;

Setting up your financial goals

One of the main requirements towards personal development when accessing your finances is setting up the required goals for your finances. This involves your plans in using your capital towards a particular target ie. what you want to do with your finances and how you want to go about it to achieve something. This in general brings about your needs and wants, which are in relation to your personal well-being.

Setting up your goals is a foundation for personal growth, because it helps you to understand the necessary capital you will need in setting up those goals. It's forms a process of organizing your finances and helps you find an appropriate budgeting method that works for you and a better idea of what exactly you are engaging in to meet your financial needs.

Examine your income

In as much as we determine to set up our financial goals, we should be able to examine our personal income, that is having a complete knowledge of how we make our capital and how we use our capital, distinguishing between our needs and wants. Learning how to examine your expenses and income gives you a fundamental strategy on what you will actually focus on rather than engaging into everything, which is detrimental to your financial goals in life, which undermines your personal growth and development.

Creating a financial budget

Is also a fundamental aspect in planning and monitoring our finances. It helps us to plan how we will be using our capital in relation to what we want to do. It gives us a general knowledge of our total capital. Creating a financial budget help you to set up your financial preferences and what you think is necessary for spending and investing your capital.

Not setting up your financial budget will always leave you in a difficult situation as you will be involved in reoccurring financial breakdown. You need to know where your capital is coming from and where it is going, so do not take the risk of not planning your budget whether weekly, monthly or yearly or it will be a disadvantage to your personal well-being and your business as well.

Understanding your current financial situation

You can only have a clear knowledge of your finances when you take cognizance of your current financial situation in order to manage your capital. Having a practical knowledge of your finances gives you an opportunity to make informed decisions on how to spend and save your capital.

Your long-term and short-term goals is characterized through an understanding of your financial situation . Taking a closer look at what you owe and what you own helps you determine your cash flow analysis, which gives you an overall decision on how to handle your finances.

Free yourself from unnecessary debt

Being in debt is detrimental to managing your finances. If you can't afford the capital to get a particular thing do not risk it by going into unnecessary debt, which in turn will put you in a difficult situation, many times it makes it difficult for one to recover as some debts comes with interest depending on the agreements.

In as much as we are clinged into our wants and needs, it is necessary to look closely on what we actually think is significant to our personal well-being. Also our liabilities frequently put us in debt, spending unnecessarily. In order to avoid reoccurring debts, I advised you follow these principles:

• If you can't afford it don't buy it

• Spend less than what you earn

• Avoid spending on your wants focus on your needs

• Always put up an emergency fund

• Balance your expenses

• Always maintain a solid budget plan

Start investing as earlier as possible

Starting an investment plan as earlier as possible put you at an advantage towards your future. It doesn't matter whether you don't have enough capital, just a little of what you can save or invest is far more significant than not doing it at all.

Start investing now in whatever way possible whether in setting up a business or managing your capital from a job you are presently working from, It may not be enough, but essential for your personal growth and development.

Saving money as earlier as possible will give you more time to grow your wealth and create opportunities for you in life.

Always track your spending

One of the most significant area in managing your finances is looking at your income and spending. Remember tracking your spending may help you to have a clear understanding of what you are doing with your finances. Failing to do so will ultimately put you at a risk for overspending.

Setting up your budget is good but tracking your spending requires a great deal of effort and commitment, without it you cannot be able to adequately manage your capital.

Start saving for your retirement

Don't wait that long to save for your retirement. Life is unpredictable, what we do today will be a reflection of our tomorrow. Build up a solid retirement plan for your future through financial saving and investment. If possible start your retirement plan in your 20s so by the time you are in your 60s you would have been able to have a solid financial plan for your future.

Managing your finances is essential for personal development because it requires certain principles in life, which when put in practice can help us individually to acknowledge the necessity of how we control and manage our finances for personal development.