Managing your finances can be a rather stressing task because there are so many influencing factors. Your income or lack of it. Your savings or lack of it. Your spending or excess of it. But most importantly what you want and how much control you have in place with respect to spending your money determines your financial success.
Some people seem to have a knack at being good in managing their finances, but there are some of us who struggle a little (or a lot). More than one-third of American population is in debt. So, we do struggle. A lot!
Other than learning tips and tricks from finance gurus, you sometimes learn through your own mistakes. Making financial mistake is no doubt a mistake that comes with a hefty price, pun intended, but it will definitely be a lesson too valuable for you to forget.
In order to manage your finances better, there are a lot of aspects that you need to take into consideration. Understanding your expenditure in and out and knowing where each cent goes to are just some of the important things to take into account. A personal finance tool come in handy for this purpose. We will discuss about the tools later.
First, the aspect that most people tend to overlook is how having mental peace is just as crucial. Here, we will talk about how mental peace can help you to better your finances.
How right mind-set helps in managing finances
- Clear priorities – What is more important to you? Driving a BMW or having $50,000 in your retirement account? A good enough home or a lavish 5 bed room bungalow, which one you prefer? Setting such priorities can determine how much you can save. Having money in your bank should be more satisfying than living a rich lifestyle with borrowed money on your credit card account.
- Calmer demeanor – It’s easy to freak out when your finances are out of control. Mental peace will help you to calm yourself down without being overwhelmed with negative emotions. You’re also less prone to panic attacks that will very likely affect your future financial decisions.
- Clearer perspective – Amidst financial chaos, you’re able to see things better and clearer with mental peace. When you have a clear vision of what needs to be done, you’re able to go at it in a more reasonable and rational way.
- Open to changes – Mental peace provides with you the ability to see things better. And this also means you’re more adaptive to changes and will be willing to change your style in managing your finances. If you have to move to an expansive place with same income, you should adjust your lifestyle accordingly.
- More options – By being open to changes, you will provide yourself with more options in the best way to manage your finances.
- Less stress – Personal finances often leave many stressed out and even depressed. If you were to gain mental peace, you will be less likely to lash out in anger when your finances are failing you or if you’re going through a hard situation. Mental peace keeps your anger and stress level in check, allowing you to manage things better.
- More careful – Because mental peace can increase your mental acuteness, you will find yourself more careful with your spending. You’re can think more rationally and be less impulsive, thus curbing or avoiding overspending. Have you ever thought of your retirement life? Will you continue to work till you are unable to move? Be careful about your future. Save enough money now to avoid working at late age.
- Increase creativity – With an uncluttered mind, you will be able to think more creatively about how to improve your finances through other means such as potential businesses.
- Happier you – Without any stress, you will find yourself happier and contented with how you run your life.
- Self-satisfaction – Being able to stay in control and know you can improve your finances will reward you with a feeling of unrivaled self-satisfaction. Of course the biggest financial satisfaction is to see your net-worth grow.
Tools to better your finances
I mentioned this over and over about the need of a tool. A tool that can clearly show your net-worth, your spending, your income and also help you manage your budget. There are many free tools available for you to use – PersonalCapital, Mint, FutureAdvisor, WealthFront, Yodlee, etc. I have used PersonalCapital for more than a year. I found it best among the tools.
I drive a BMW but, that can’t generate enough satisfaction compared to what an increasing net-wroth can. I am sure many of you will register for PersonalCapital account but, most of you will hesitate to link your financial accounts to it. It’s like having a bed but not willing to sleep on it.
Register all your accounts there to reap the most benefit. Only when you’re aware of all the symptoms, you can get a good treatment. I receive emails asking how secure these personal finance tools are. Let me assure you it’s completely safe to link all of your banks, cards, brokerages, mortgage and retirement accounts. I even linked my home and car values, to know my actual financial worth. There are millions of people using these financial sites and apps. They are totally safe.
I am reiterating the importance of a tool because, it’s otherwise very hard and time-consuming effort to accurately derive your overall income, spending and saving numbers. Especially if you have multiple income sources, multiple bank/card account.
Let’s assume you have only one source of income and you have only one card to use. Should you use a personal finance tool then?
Absolutely, as long as you have diversified your investment or you have loans outstanding. It’s extremely hard to measure your investment performance with the tools your brokerage provides. You can’t compare your portfolio performance with your own performance last year. You hardly can compare them against bench-mark stock indices.
I am a visual person. Unless I am explained with a graphics, it’s hard for me to understand numbers. These tools do exactly that. They make the numbers crystal clear.
Prior to the emergence of personal finance tools, I used to have nightmare tallying my income and spending. I had no clue about my net-worth. Today 8 out of 10 people in America have no clue about their net-worth.
Hey! They are safe, secure and free!
Your mind-set may impact your financial performance, just like with anything else in your life. To improve your finances – get a positive mind-set, set up financial goals, be careful, make yourself financially accountable to someone else. And most importantly; use a personal finance tool.