Becoming financially successful can be done if you have the right mindset and game plan. Mastering your money is a great goal, and through finding success with your money and finances, you’ll be able to live life the way you want, stress-free.
Being a master of your money is an incredibly empowering feeling. Having a strong financial foundation can remove the feeling of the helplessness, which so many people experience. While it may seem tough, mastering your money can be done.
While you might feel uncomfortable talking about money, having a shaky financial situation can take a toll on your well-being. Money is commonly cited as the leading cause of relationship issues in the USA.
Money is also the top cause of stress for an individual based on respondents from 22 countries!
You can get a handle on your money starting today, and become the master of your money.
You may be thinking: What exactly do you mean by becoming a “master of your money? How can I master my money?”
Mastering your money is coming to the realization you are in control of every aspect of your finances.
Make no mistake, improving your financial situation will not be easy. However, there are a few easy steps to take to get a handle on your finances, regardless of where you’ve been or where you are currently.
Following these six easy steps will allow you to overcome the feeling of being overwhelmed, allowing you to get things back under control.
Whether it’s making money, spending money, or saving money, YOU are the master of your money – and your life!
In this post, you’ll learn about the following easy to take steps to get control of your money:
- Educate Yourself on Personal Finance
- Understand the Current State of Your Finances
- Categorize and Track Your Income and Expenses
- Set Goals and Use Affirmations
- Automate Your Finances
- Understand How Your Money Can Grow Over Time with Investments
Let’s dive into each of these steps to help you master your money.
1. Educate Yourself on Personal Finance
Becoming financially literate is the key first step to mastering your money. This is easier than ever in today’s day and age with an unimaginable amount of information available to you online and in books.
If you are new to personal finance, it can be very intimidating.
There are hundreds of terms made up my financial advisers and other “professionals” which seemingly are made up to confuse you.
You don’t need to know all of these terms, and can start with the basics. In the next section, you’ll learn the five most important things to track and calculate for yourself.
Also, by learning more about personal finance, you can learn what to do, and what not to do with your money.
People often say that the best way to learn is from making mistakes. I say the best way to learn is from others’ mistakes.
Luckily for you, there is a vast amount of people from all walks of life who share their experiences (including mistakes) on the Internet.
Check out this list of 800+ personal finance resources that we have curated. There are over 800+ active personal finance blogs you can learn from out there on the internet!
2. Understand the Current State of Your Finances
Have you ever been on a road trip and not knew where you were? If you’ve been lost, then you probably didn’t know where you were going. If you don’t know where you are going, you certainly aren’t going to get there.
With personal finance, if you don’t know where you are, then you will not be able to master your money.
Becoming a master of your money involves becoming aware of the current state of your finances.
If you are a beginner, then you may be lost and not knowing what things to track. However, the list of financial accounts to track isn’t too bad to pull together for yourself.
In a spreadsheet or on a piece of paper, think about and write down the following things you own, and which affect your financial life:
- Assets
- Assets are things you own, and items with value (investments, houses, cars, cash, art, precious metals, etc.)
- Liabilities
- Liabilities are things you owe to someone else (mortgage, student loans, credit card debt, etc.)
- Income
- How much money is coming into your bank account on a monthly basis?
- Expenses
- What are you spending on different categories each month? You’ll learn about this in a later section in this post.
- Credit Score
- What’s your credit score? You can obtain one per year free from Annual Credit Report.
With these five pieces of financial information, you will have a great understanding of your financial situation.
After finding these five pieces of financial information, you can do some calculations to further improve your understanding of your finances.
Calculating Personal Finance Metrics to Master Your Money
There are four main personal finance metrics you should be calculating to get a better understanding of your money over time.
Your credit score is a standalone piece of information which you can track over time. While credit score is important, this calculation is handled by the different credit agencies. You don’t need to worry about it.
The four personal finance metrics to track are net worth, income, expenses, and savings rate.
Net worth is simply your assets minus your liabilities. Essentially, your net worth is what is left over if you sold everything and paid off all of your debts.
Don’t be discouraged if your net worth is small or negative. You are taking control which means you will be able to improve it!
Next, we have income. You can find your income from your most recent paycheck, or if you are someone who works gigs, you can add up the number of deposits to your bank account from your bank statement.
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