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We all want to be successful with money, but it can sometimes feel impossible. With these 5 easy steps you can learn how to be successful with money and set you up for the financial life you want and deserve.
Before you start going through these steps, make sure you know what financial success looks like to you. What is it that you want to achieve?
Do you want to stop having a worry pit in your stomach towards the end of every month?
Pay off your debt?
Are you planning to buy a house?
Is success to be able to buy designer clothes and lavish holidays?
The possibility to retire early or take a break from working?
Consider your goals and values and what being successful with money would mean to you. What is enough?
How to be successful with money in 5 simple steps:
Step 1: Create Successful Money Habits
With about 95% of our actions being unconscious, our habits, our money habits, will be the cornerstone of our financial success.
Check your bank statement to find out where your money goes, and if there are any habits you can change that would put you in a better financial position.
Are you enjoying all the take-aways or could you swap some for a simple pasta at home?
Do you buy stuff on Amazon that you end up not using?
Are you shopping around for a good deal before you buy?
Do you take opportunities to earn more money?
Be aware of your financial habits, consider which of them serves you, and if there are any money habits you could add or change to be more successful with money.
Step 2: Be Financially Aware
Most of us didn’t learn about personal finances in school, and for many of us, money was a tabu that wasn’t much spoken about at home or with friends. It’s time to change that! To become financially aware.
Learn Basic Personal Finances
If you feel like you’re bad with money, it’s likely that you just haven’t yet learned what you need to know. Is this you? A great place to start is Pete Matthew’s book The MeaningfulMoney Handbook – Everything you need to know, and everything you need to do, to secure your financial future.
If you already know the basics but want to take your finances to the next level, you may want to check out the Choose FI podcast which is all about taking control over your finances and stop living pay check-to-pay check.
Be Involved in Your Own Finances
It’s perfectly fine to get help with your finances. It may be that your partner manages the money for the both of you, or that you have hired a financial advisor. However, you still need to know what’s going on with your money.
What’s the long-term financial plan?
Where are the money placed?
Do you have debt?
What’s happening with your pension?
However much you trust the person who manages your money, it is your financial future and you need to be aware of what that looks like. If it aligns with your goals and dreams.
Step 3: Automation is Key to Successful Money Management
The best thing about successful money management is that it can be almost completely automated!! Once you have an understanding of your financial situation and you know enough to understand how you can reach your financial goals you can automate, automate, automate.
Make a plan to pay off your high interest debt and set up direct debits.
Make sure all your bills go on direct debit as well.
That includes your credit card bill which should be automatically paid in full every month.
Automate your savings and investments.
Then enjoy spending the money that’s left!
Step 4: Invest for Financial Success
Investing is no longer optional. At a very minimum our pensions are being invested for us and if we are not aware, and involved, we may not be able to retire.
Investing can take many shapes or forms, but the easy way to successful investing is to make sure that your money is in a low-cost index fund. This way your long-term investments will follow the stock market, which on average has increased with 10% per year.
Step 5: Review Your Finances Regularly
Finally, even with all the automations you still need to stay aware and involved in your own finances.
If you are trying to change your financial habits, you may want to do a weekly review, just checking in to see how you are doing.
Once you’re happy with your spending pattern and automations however, a yearly check-in on your investments and overall financial situations is enough! Unless you want to check in more often….
The only other time it’s critical to review your financial situation, to ensure you continue to be successful with money, is when your circumstances change.
When you get a raise or lose your job.
Move in with your partner or have a baby.
When you move house, or take on additional financial responsibilities.
Consider how your financial situation, and your money habits, will be impacted by the change. This way you can continue to be successful with money even when life throughs you curve balls!
How to Be Successful with Money
In summary, being successful with money, as with most things in life, follows The Personal Management Cycle.
Learn How to Be Successful with Money
Learn what you need to know, both about personal finances in general, and your financial situation in general.
Plan Your Financial Success to be Successful With your Finances
Consider what you want your financial future to look like and how you can get there.
Systemise Your Money to Be Successful Long Term
Automate, automate, automate!
Review Your Financial Success
Check in every now and then to make sure you are on track. Do a thorough review if your circumstances change. Other than that, just get on with enjoying your life!!
What is the first step you will take to be more successful with money? Will you pick up a personal finance book? Consider your money habits? Finally log into your pension accounts and figure out how much money you actually have saved for retirement?