Successful handling of money – what does that mean at all??
How one creates it to have its finances firmly in the grasp?
If you are looking for Orientation in the financial jungle then you are in the right place.
This article is about what successful money management is really about, and what basic financial rules you should be sure to follow.
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The key to financial success
I would like to start with a little analogy:
There is a type of bamboo in China that grows up to 3 meters a day .
3 meters a day. madness! What growth.
Bamboo has a second ingenious property: it is extremely robust And hardly get "broke"…
Both things that also make financial success (robustness + growth).
What is the secret of bamboo?
The success lies in the preparation ..
This particular plant species takes care of only one thing for a whole three years: A healthy root system.
Until then there is no visible growth and no quick successes.
Before bamboo grows in height at a remarkable pace, it focuses for years on developing a strong root system.
That’s what good money management is all about:
Robust and stable to be positioned (for your everyday life) and later a healthy growth to put down.
For this you don’t need higher mathematics and complex financial knowledge, but a strong financial root system.
How to set yourself up financially as strong as bamboo, we’re going to take a look at that now…
The most important rules for success when dealing with money
The first thought when talking about finances is usually: I need to pay off my debts, plan financial investments, make retirement plans…
Depending on the point you are at, this may also make sense. But all these points do not belong to the financial roots, which make up a good handling of money and long-term success.
The following are basic rules for success that you should take to heart before taking care of the issues just mentioned:
1) Protect your money (from its biggest enemy)
The first point has it directly in itself. For most people lies here already the one giant chance around financially more rauszuholen.
You think now perhaps of taxes or the inflation.
But this is about a different phenomenon. It carries the name:
The law of waste (see wikipedia: Parkinson’s laws).
It says: "Your expenses always rise to the limits of your income."
Means: The more money you have at your disposal, the more you give (automatically!) from.
The law of usage is the biggest enemy of your money. You should "protect" it from that.
I know it very well from myself. My standard of living has risen with every jump in income.
This is normal, but if you don’t pay attention, you won’t make any financial progress with increasing income (and you’ll end up empty-handed).
Nice quote from Charles A. Jaffe: "It’s not your salary that makes you rich, it’s your spending habits."
2) Take control of your money flow
The bottom line: You need to take care of your money.
Logical. But exactly this is not so easy at first..
Why? You can think of it this way:
Each of us has various cash flows (income and expenses)…
Regular payments, irregular payments, small amounts, large amounts, monthly installments, quarterly contributions, annual contributions, credit card payments, cash withdrawals, and so on…
This ensures that we quickly lose the overview and lose control.
I like to compare it to a chaotic crossroads:
When everything is in a mess, it’s impossible to keep track of it all.
But to be financially successful, this is where you have to start. You need to tame your cash flows and know what is happening with your money.
I’ll show you a simple guide to this in my financial crash course:
3) Take care of a protection
Life is always full of surprises. Especially financially it often goes according to Murphy’s law: "Everything that can go wrong, will go wrong".
The car has to be repaired, the dog gets sick, the washing machine breaks down or the children go on a school trip.
If you are unprepared for such unplanned expenses, such expenses will always wreck your life plan at the exact moment it least suits you.
4) Think about your future
In Germany, the pension system already has to be subsidized today (keyword: pension hole).
Many retirees slip below the poverty line when they retire.
It means: If you don’t make your own provisions, you will definitely have to cut back in old age.
According to the German pension forecast, when we retire in 2030, we will only have approx. 43% of the last net salary will be at your disposal.
Imagine that now, from one day to the next, you suddenly had to manage with half of your money. Does that work for you?
At the latest in the pension age a bad handling with money catches up you therefore.
5) Live, (but after your! Standard)
Be good with your money, that sounds like: Saving money, putting it aside, and foregoing consumption.
Exactly this is also a part of it. But only one part.
Because a healthy approach includes, above all, taking your daily life into account.
Money is a means to an end. Just accumulating a lot of money doesn’t make sense. Your money should support you to live the life you want to live.
Money is a means to an end and should enable you to live the life you want to live.
Be aware of what is important to you in your life and see how you can make these things possible for yourself.
Consciously treat yourself to things that are really good for you.
Finding the right balance is key to financial success.
6) Set long-term goals over short-term gratification
Being financially successful is a long-term process.
To strive for wealth "overnight" means to hope for luck (lottery, casino). This is of course possible, but relying on luck is not a reliable way to go and in most cases is built on sand.
Being financially successful means thinking long term and focusing on growth over a long period of time.
Thinking long-term also means saving toward your wants, rewards or your next vacation, and not having to have everything right away.
This will also increase your appreciation of the cause and make you feel better about consuming.
7) Build up your own know-how
The investment with the best return is always an investment in your know-how.
Until you build up the necessary knowledge, it’s not worth investing your money anywhere either.
So in the first moment, concentrate on getting a better grip on your finances, putting money aside and becoming more confident about finances step by step.
In this framework it is only possible to briefly touch on these to give you an overview of them.
So don’t be intimidated by it if you don’t know exactly how to get one or the other point implemented.
You can get more on this and more detailed steps for making it happen in my free course:
Self-test: How well do you manage your money?
Ten questions, two minutes, and you’ll get an honest assessment of how you’re spending your money.