How to Conquer Money Management

Webull 01/05/2023

Having the ability to manage your money well is a great skill. For investors, it's even more important to have a solid grip on money management. When you can manage your funds well, you have increased potential for greater profits and the ability to understand how to make your investments go further. Although, this might be easier said than done. Keeping up with a busy life can make it easy to lose track of time and make budgeting harder. But, staying organized and coming up with a plan that fits you and your lifestyle can help keep you on top of managing your assets.

Defining Money Management

Money management involves much more than just budgeting. While keeping a budget is a significant aspect of it, money management also involves tracking your finances, assessing spending and important payments, putting funds into savings, and investing. If you're not sure where to begin or wondering if there is anything more you can do to improve your money management skills, take a moment to evaluate your needs, wants, and goals when it comes to organizing your finances.

Taking Care of Necessary Spending

Of course, there is a certain amount you need to spend each month. This usually includes rent or mortgage payments, insurance, utility bills, groceries, etc. Depending on your needs, you may have more or less you need to spend money on regularly. Before you can successfully manage your money, you need to know how much you have left once the necessities have been taken care of. These things can frequently take up much of your available funds, especially when you are just starting out in your career or only beginning your journey as an investor. Once all necessary expenses have been accounted for, you can then move on to saving and investing.

Investing on Your Terms

When it comes to investing, it's crucial to evaluate your needs, goals, and risk tolerance before placing trades. Once all your necessities are covered, you can then determine how much you're able to invest each month. This amount may be different depending on how much risk you're willing to take on and can even vary from month to month. Understanding how this will look according to your needs is important—if you aren't careful, you may end up taking on a level of risk you aren't ready for. Always note that any investment involves risk, and there is never a guarantee that your trades will turn a profit. Keep this in mind when you're evaluating your goals as an investor; good money management skills allow you the freedom and opportunity to grow as you gain experience.

On this note, don't forget to put money into savings each month as well. While your investments can turn a profit and boost your income, it can also set you back financially. If you put too much faith in your investments and they don't turn out the way you hoped, you may regret not putting some of that initial balance aside for a rainy day.

Creating a Personal Finance Plan

If money management doesn't come easily to you, creating a personal finance plan can help. It might be tough to stick to it at first, but with a bit of discipline, you can get into the habit of following it.

First, you need to get a good idea of how much money you typically spend each month. Wherever your money goes, it's important that you keep track of it and know how exactly how much you're spending on necessities, leisure, or other things you normally buy. This can help you formulate a budget. Write down approximately how much you spend on a normal basis and compare that to your income. While you might find it boring or unnecessary to list out all your expenses, this is a vital first step in creating your plan. When you do this, you can see exactly how much you're spending and where. Your banking app might even have a breakdown of your spending habits that can help you out with this as well. This way, you can see the bigger picture and decide where you might need to cut spending (if you discover you need to cut back), whether it's going out to eat less, shifting your monthly investments, or cancelling subscriptions you don't use as often as you once did. Seeing this all laid out in front of you can give you a good idea of how best to budget to fit your lifestyle. For investors, this can mean taking a look at your long-term goals and adjusting your spending in order to reach them.

Once you've got the budget handled and the plan set up, be sure that you're still keeping track of your finances and adjusting your plan when necessary. Money management isn't a one-time thing—it's an ongoing practice.

Final Thoughts

It's no secret that money management can be stressful. If you have the means, you can also look into seeking professional financial help. This can be a great choice for those with unique financial situations or those in need of specific financial services. If this is the path you choose to take, it's crucial to do your own research beforehand to ensure that you're making the best choice for your needs.

Although it might be difficult, it's necessary to stay positive. It can be easy to feel down when you feel like your investments aren't turning profits at the pace you expected, your necessary spending for the month was higher than usual, or you had a financial emergency that set your savings back a little too much. But, a negative mindset will only hinder your goals further, as it might make you veer from your plan to attempt to make up for losses. However, you should do your best to keep up with your plan in order to optimize the outcome. With the right tools and the right mindset, you can conquer money management and be well on your way to reaching your personal, financial, and investment goals.

Disclaimer: Securities trading is offered to self-directed customers by Webull Financial LLC, member SIPC, FINRA. All investments involve risk, including the possible loss of principal. You should consider your investment objectives carefully before investing. This is not a recommendation, investment advice, or a solicitation for the purchase or sale of a security. Additional info: