financial management

How to Improve your Financial Management Skills?

financial management

For most people getting through the end of the month without blowing all their money is a tenuous task. We work as much as we can and then get frustrated when we realize that in the end we have nothing to show for it. How can this be possible when we are only getting by & avoiding wild champagne parties on first class flights to Dubai? The answer is simple: even though we think we are only buying the bare necessities we are actually squandering our money on unnecessary things. Unfortunately nowadays a majority of people don’t know how to handle their money wisely. You can blame your parents or the education system but in the end the responsibility is yours. Luckily managing your finances is a skill that you can learn, so use this list to help get on the right track. So stop complaining and learn how to improve your financial management skills today!

Improve Your Financial Management Skills With These Steps

Step #1: Know your current Financial Situation

To develop sound financial management skills, start by reviewing your current finances. Assessing your financial situation helps you understand your strengths, weaknesses, and areas to improve on. This insight will help you work towards achieving your financial goals. 

Analyze your credit card and bank statements and take the significant expenses into accounts like mortgages, student loans, groceries, car-related fees, etc. Compare these with your income to evaluate your financial situation. If your expenses are more than your earnings and you can’t pay off your credit cards every month, devise ways to minimize your expenditure. 

Step #2: Set a Budget

Most people have no idea where their money is actually going. For this reason it’s essential for you to sit down & figure out where your money is going. Make a list of all the things you spend money on like lodging, food, & entertainment. After you see how much you are spending each month, compare it with how much you make. When you see the statistics it will force you to create a reasonable budget for each category. You may realize that over time your occasional indulgences are costing you a tremendous amount of money.

Set a budget and create a plan

Step #3: Create a Plan

Once you have a set budget and realize how much or how little you have to work with you need to create a plan. Where do you want to be in a year & how much do you have to save to make it happen? If you are dismayed by looking at your finances you have to realize that everything can be changed. Sitting in front of the TV to unwind every day is wasting valuable time/money that could be used working a second job, learning a new skill or improving your current skills so you get a raise. Figure out where your time & money is going so you can change it. Once you have a plan stick to it & don’t be afraid to make the lifestyle changes necessary to make it happen.

Step #4: Be a Conscious Consumer

For most people some of the biggest drains on their finances is food & shopping. When you go grocery shopping do you compare prices & look for sales? There are a number of apps that connect you to deals that will save you a ton of money on food. When you buy clothes or any item the same principal applies. You need to look for good deals & always check to see if buying this item is really worth the blow to your budget.

Step #5: Think Like an Investor

Saving money is great, if you have reached this point you are already ahead of most people. However making your money work for you is the key to getting wealthy. Learn how you can invest your money into something that’s guaranteed to generate income. Always do your research before you pull the trigger so you invest wisely. Remember blindly throwing your money into a get rich quick scheme is worse than just holding onto the money while you look for a better opportunity.

Step #6: Get on the Same Page as Your Spouse

If you are diligently working to save money while your spouse is blowing through money like a teenager on spring break both of you are doomed to fail. Part of being together is sharing the same vision & goals so you both need to synchronize your spending habits to achieve them. Only then can you make progress & find innovative ways to work as a team to reach your financial goals.

Think like an investor

Step #7: Make your mind visualize what you will be when you will be old and without work

As a young man or woman you forget that you will never remain young forever and one day you have to grow old, when your hands will tremble, you will have one or more health issues and can’t do work any more. This visualization by the mind of the future scenario will help you keep more dollars in your pocket and you will start saving at once. But remember don’t let your mind forget this soon. Remind it often of how you will look like after few years in old age.

Step #8: Push your mind not to use credit card

You are a proud owner of credit card and boost among friends how many dollars bank has provided you in the credit card. But that is like a loan which when you spend with credit card you need to pay back with interest. So push your mind not to use credit card for every little purchase. For this draw something motivational and hang it on your wall so that your mind reads it all day not to spend with your credit card but put back in your drawer to least use it.

Step #9: Take chewing gum and headphone when you go for shopping

Remember we have to put money in our pocket to save and train our mind to do so. A simple trick when going out for shopping is take chewing gum and a headphone. These are most liked by your mind and brain and when having this stores that manipulate you to buy because there is a deal and discount or buy one get one free will fail to lure your mind. Chewing mint gum could counteract the ambient scents in stores and make you feel fuller so you don’t buy food impulsively, and wearing headphones could block out the music designed to make you stay in the store longer.  

 Step #10: Let your mind calculate the odds- Salary earned per day Vs salary spend per day

Healthy minds do lots of calculation. When you are tempted to buy something let your mind do some calculation.  Do the maths about how much that item really costs in terms of hours you’d need to work to pay for it. If you want $90 for a pair of jeans then it means it is  more than 12 hours of work at the $7.25 minimum wage. Ohh..mind at once wants to put more money back in the pocket.

Avoid using credit cards

Step #11: Give your mind a motivational tip

Yes minds also want tips..not to spend but to save. Describe the way you want to treat your money and over time it could become second nature. I always relax my mind I will only buy clothes once a year that too when they are on sale in off season. Trick your brain this way to save money.

Step #12: Getting a bonus ask your mind to invest it

In a research it suggests that starting a program where you’re steadily increasing the amount you save could be more effective than making an effort to save a lot more now. Like  making a plan to save most of your next bonus rather than trying to cut back now.  Again your mind should then stick to that plan.

Step #13: Ask your mind to try to take out less denominations out of your pocket

Taking out $2 or $5 smaller denominations breaks the larger bill from your pocket. I remember one of my friends after coming home at night from his store would put all the pennies and cents into a bi jar. At the end of the month he had lots of hundred dollars saving without any pain.

Step #14: Mind should work offline to save

There are so many online stores where people transact daily to buy so many of goods. Its because mind works online. Take the mind offline to save more. Simple way is not to  store your credit card information with online stores or autofill data, train your mind to always ask before buying anything if you’d rather have the cash if a stranger offered it to you, stick to the 30-day rule to make sure you really want something, or use a prepaid debit card to force yourself to ponder your limited resources.

Step #15: Make your mind happy by playing saving games

Games helps your mind relax and there are so many free games to download on your cell phone or PC or tablet and start playing. Money saving games like SaveUp and SmartyPig turn saving money a kind of challenge where you can watch the your money grow and reap other rewards. You can start a competition among family or friends to put more money in your pocket by playing many challenging money saving games.

Smarty Pig – Money saving tool

Step #16: Shun your mind from people or places that coax it to spend more

Make a list of places, things, or people that cause you to make poor spending choices. Identify the triggers that ask you for an outing, shopping or few drinks at the pub and encashing your savings. If you can identify these people who make your mind weak and spendthrift then shun them from your life. Avoid their calls, ask them to come over to your house for a simple cup of coffee or just kick them out of your mind.

Finally remember that it takes a lot of time and practice to master financial management skills. While mastering these skills may seem difficult at first, and they will be, this expertise and skills becomes second nature if you stay committed and stick to it. Note that if you work hard and the faster you develop these skills, the quicker you’ll secure your future and manage your finances. 

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