One of the hardest parts of managing your money is just getting started. While there’s a wealth of information available online, it can feel very overwhelming to tread through it all in an effort to start managing your financial life.
There’s no one size fits all formula. Everyone’s life is far too different for a blanket solution. What works for some, may not work for others.
On the one hand, this is terrifying! It means it’s up to you to figure out your own budget. On the other hand, it’s actually great news; you can completely customize your finances to reflect your priorities, goals, and values.
But you gotta start somewhere. Here are some options you can try to start managing your money.
Try a Formula First
This may seem contradictory considering we just made the bold statement that there is no one-size-fits-all formula for creating a budget, but it’s much easier to at least start with a guide and then customize it as you go along. There’s also no need to try and reinvent the wheel and start from scratch.
Just note that this may heavily depend on how you make your money. It’s one thing to be a W-2 employee, and it’s another thing entirely to be a contractor or run your own business. The former has taxes taken out of their paycheck, the latter does not. (And that’s just one of many key differences.)
Which formula you choose to start with may also depend on whether or not you have debt. It’s easy for someone without debt to save 20% of their income toward financial goals. But if you’re in the process of paying off credit card debt, then Dave Ramsey’s methods may resonate and make more sense for you.
Many of these formulas and guides also walk you through the process of actually taking a look at your entire financial situation and getting clear about where you stand. This is crucial step that many people try to avoid when they attempt to figure it all out on their own.
Customize Your Budget According to Your Values
This where the “personal” comes into play in personal finance. Like we’ve already mentioned, everyone has a unique financial situation, which is why it’s up to us to create a viable plan that makes sense for our lives. Once you’ve gotten your feet wet with a known formula, then it’s time to start customizing it.
One way to do this is to take a look at your own values and goals. What matters to you right now? What financial goals are you working toward at the moment?
Retirement? Saving up for your kid’s college education? Buying a house?
These are the kinds of questions more financial planners are asking their clients as they create financial plans that will help their clients reach not only their financial goals, but some of their life goals as well. For some, building wealth is enough of a goal to stick to managing their money. For others, needing to understand a more in-depth “why” they need or want more money is critical.
That’s because at the end of the day, managing your money isn’t just about saving and investing. Money is a tool that helps us attain what we want out of life. By asking yourself what your big-picture goals are, you’ll be able to define what the money will be used for and you’ll be more likely to stick to your plan.
(Don’t just pick financial goals that you think are expected of you, either! Not everyone wants to buy a house -- and that’s perfectly okay. Take the time to actually think about what it is you want out of your life and finances, and then adjust your plans accordingly.)
Learn to Manage Your Emotions
According to Gallup findings, half of Americans are still experiencing substantial financial anxiety. While this is lower than it was during the Recession, it’s still a much higher percentage than what we were seeing before the economic downturn.
If you approach your money from a state of fear, then you’re going to hate managing your money. If you hate managing your money, then you’re less likely to actually do it. This is true even if your balance sheets are looking pretty good -- and it’s exactly why you need to learn to relax.
Fear also leads people to do some stupid stuff with their money. One example is when the markets are rocky and everyone starts selling their securities despite the fact that common investing wisdom (and decades of data) tells them not to. No matter how many times Warren Buffett tells people to keep their emotions out of investing, many of them don’t. This leads to shaky portfolios and a lot of money lost.
Just like the American stock market, your budget will have up days and down days. It’s how you handle the down days that can make all the difference in whether or not you make progress toward your financial goals. Managing your money has just as much to do with how you manage your emotions as it does with the actual numbers.
There’s a big difference between the person who cries “I’m never going to get out of this debt!” and the person who asks “How can I find ways of making extra money so I can pay down my debt?” The former is defeating, the latter is empowering. Now, who do you think is more likely to actually pay off the debt?
Managing Your Money Doesn’t Need to Be Scary
The act of managing your money doesn’t need to be so scary. You have guides available as starting points, and from there you can customize your plan, get clear on your financial picture, and begin to build a foundation that supports a thriving financial life.
About the Author: Amanda Abella is an Amazon bestselling author, speaker and personal finance expert who helps millennials make money their honey through online business. She has built an online brand that touches thousands each month and has been featured in Forbes, The Huffington Post, Seventeen Magazine and more.