5 Reasons Why Managing your Money is so Important
Managing your money is not only important for your own financial security, but it’s also essential for your overall well-being. Money can be a major source of stress, and if you don’t have a good handle on it, it can take over your life.
In this post, we’re going to share five reasons why you need to start managing your money. Whether you’re looking to save money, invest for the future, reduce your debt, or just have a better understanding of your finances, managing your money is essential.
1. Gives you confidence and a feeling of control
Money can be a major source of stress, and if you don’t have a good handle on it, it can take over your life. This creates a lack of control which further contributes to stress. When you have a good money management routine you will be more organised and able to deal with different circumstances that come your way. You will be more able to make better financial decisions and have the resources needed.
2. Creates stability and security
We all need enough money to cover our basic needs i.e., food, shelter, clothes etc. Beyond this, we need to have enough for emergencies. Life circumstances happen to everyone and if we don't have an emergency buffer, we can lose everything we've worked for (or end up in a huge amounts of debt). Financial security is having enough money to cover your expenses, emergencies and retirement without the fear of running out.
Home ownership brings a certain amount of security for a family for many reasons. Having your own sense of ownership to nurture and raise a family where you can have a sense of freedom, create gardens and improve on the land as you wish. Property creates generational wealth and is one of the best assets to pass down the line.
3. You will be able to make better financial decisions
Strong financial knowledge gives you a good foundation to make better, more informed decisions. We have to make financial decisions every day and if we come at it from a place of knowledge and power, we know what to do and less likely to make bad or ill-informed decisions.
Instead of being re-active, we can be more pro-active with our finances. For example, if you're invited to go on a short-trip away if you don't have the money instead of putting it on credit and paying it off for the next 5 years, it would be wise to create a budget for these and other important things in your life ahead of time so you can be confident to say Yes and not regret your decision later. Planning ahead sounds boring, but it creates freedoms in the long run.
4. You can plan ahead
Without good money management, you are likely living day to day, payday to payday spinning your wheels. As a society we are typically living longer and our need to plan ahead financially is greater for both for ourselves and our families. Planning for your future is a necessity, not a luxury. Putting money aside for the future and investing is one of the best ways to ensure you don't end up on the pension which is currently $468pw for a single person (!) Yes that's right, less than your current food and clothes bill.
The Association of Superannuation Funds standard shows that a single person will need to have $545,000 saved for a comfortable retirement ($640,000 for a couple). Of course, the amount you need will depend on a number of factors, some we can plan for, others we won't know the answer to.
Some factors include:
- how long you will live
- what medical costs you might need
- whether you still have a mortgage or you are renting
- which country you decide to retire in
- Others you may have to support financially
- the cost of living, etc.
5. To improve your overall well-being
Managing your money is important not just for financial well-being, but your emotional, physical, social and mental well-being. Money literally has an impact on so much of our lives.
Just some of the areas of our lives affected:
- the things we can do (or can't do)
- the people we can help (or not help)
- what level of education we can seek
- where we can travel to and/or experiences we have
- to what degree we invest in our health
- level of (or freedom from) worry
The stress that is caused by mis-management and lack of discipline around is untold. The strain is real and causes relationship break-ups and has a huge impact on mental and emotional well-being.
Summary
Without basic money management principles, it's impossible to know where you're at. If you're not disciplined with your money, you'll quickly find yourself in debt and once that happens, it's difficult to escape the trap.
Managing your money is a key component to becoming successful. If you want to be financially secure and feel like things are going well in your life, then you need to manage your money.
I hope that this article has been able to help you learn more about the importance of managing your money.
Finally, I hope that you will find something in this list that you can act on today.
Please contact me anytime if you have any further questions or concerns by visiting https://cashflowmastery.com.au Thank you for reading, I would love to hear from you!
Warm wishes,
Annette :)
