New to Financial Management? Here are 4 Skills to Master!

Financial management is a specialty.

And it isn’t something you master overnight either. It takes time…

Why? Because there are many sub-skills involved with it.

Today, we’ll discuss those sub-skills. We’ll talk about the 4 financial management skills to master!

#1 – Budgeting.

Budgeting

The first skill you ever learn after moving out of your parents’ home.

This skill gets complex over time. After all, as life goes on, you take on new obligations to establish yourself…

You take on home loans, car loans, student loans and even physician home loans if you follow that career path after your university studies!

Then there’s family, and improving your living standards…

Also, budgeting is a case-by-case skill. It differs from one person to another.

How one person budgets differs from another.

It’s best if you seek advisory help on formulating (and slowly editing) your budget. Especially if it includes debt…

Speaking of that…

#2 – Debt Management.

Debt Management

Few people live with ZERO debt.

Those who do are either broke or rich.

However, there are some people with good lives and ZERO loans…

You can strive to be one of them someday. However, you have a long road ahead of you, lasting decades.

What Debt Tracking Includes.

It includes tacking your income to debt ratio.

Only 25-33% of your income (at most) should go to debt repayments.

This includes all of your obligations. It includes your mortgage, credit card debts, student loans, and business debt.

This hard rule ensures that you don’t take on too much risk.

Other Things to Manage.

That would be your credit score.

Learning what is a good credit score is vital, and for an important reason…

Your credit score defines the loans you can take on.

If you have a higher score, you can take on loans with lower interest, and longer repayment periods!

And this removes pressure from high monthly repayments and possible debt collectors.

So What is a Good Credit Score?

It’s defined by many things.

In general, it looks at your ability to take on and manage debt properly.

Most of what affects your score is your debt duration, your repayment times, and the inquiries you make…

If you pay on-time, have managed debt well for years, and don’t borrow to the limit, then you fare well.

If not, your score suffers. And so do your loan opportunities.

#3 – Prioritization.

Prioritization

Most of what you want in life never happens in an instant.

It takes time. You can’t simply pull out a credit card and binge spend to your heart’s content…

Well You Can – But…

Your financial future suffers.

So you have to prioritize what gets bought each month (budget).

And you must prioritize what long-term obligations to take on (debt management).

Example.

You can’t take on student loans and a mortgage at once.

That’s too much debt to pay off. And you’ll need a high paycheck to satisfy both demands…

In fact, it’s best if you pay one debt at a time. Once you clear student loans, you can take on a mortgage, and vice-versa (if you want to further studies).

#4 – Visualization.

Visualization

You can’t prioritize, budget, or manage debt if you can’t visualize.

It is how all lifestyle planning takes place. If you cannot visualize the future you want, how will you plan your life?

But How Do I Visualize?

You do so by focusing on two things.

The first would be your goals. Where you want to be, live, work, etc.

And the second would be your means. You want to see how you can get there sustainably.

Sustainably?

Yes, we want to emphasize that part.

Sustainability is everything with financial management. If you cannot keep a sustainable lifestyle, why try?

Live within your means. Take on debt that doesn’t break you, or force you to live in stress…

Visualization helps with that. It’s a dialectical process between your “goals” and “methods.”

FINAL TIP: Aim to Live Stress Free.

And isn’t that what financial management is all about?

Because who wants to wake up in the morning feeling stressed out? Who wants to live day-to-day being tortured by piles of bills?

It’s not a good place to be in.

Be sure to learn the previous skills, and start mastering your financial management!

New to Financial Management? Here are 4 Skills to Master! was last modified: by

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