Money management skills are absolutely essential to have, but they are not something that is taught in school. Recently some states have started requiring mandatory personal finance classes in high school, but not all the states. Of all the life skills that schools should teach, but do not, money management skills are perhaps the top of the list. This is one reason so many people who should know better end up retiring without having saved a penny or end up in serious debt without even knowing how they ended up in that situation. There are, however, some steps that you can take to help develop your money management skills no matter what stage of your life you are at.

Tracking Your Money or Cash Flow

Perhaps the most basic skill in money management is being able to track your cash flow. Understanding what you have coming in and going out the door in terms of your money is absolutely essential to ensuring your personal financial health. You will not be able to save, invest, know what you can afford or make any type of future monetary plan or decision without knowing what your monthly inflows and outflows are. Without understanding your cash flow, you are literally flying blind. Tracking your cash flow is not difficult and, with virtually every bank or credit as well as hundreds of smartphone apps that assist in automatically categorizing and organizing your transactions, this is often a much easier task than most people realize. It does not require dozens of hours with a rudimentary spreadsheet and a checkbook.

Goal Setting

Whether it is to get out of debt or to save a certain amount of money towards either retirement or to enable you to buy a house, the power of goal setting in your financial life cannot be overstated. Human beings are motivated by “wins” and, if there is anything you can count on to give you a sense of purpose in your personal finances, then setting and pursuing a goal is worthwhile.

However, personal financial goals also need to be realistic. Waking up when you are 61 without having a penny saved for retirement and setting a goal to retire at 64 with $1,000,000 or graduating college with $200,000 in student loans making $40,000 in an entry level job and thinking you will pay those loans off in a year is simply not realistic. Therefore, whatever goal you set needs to be realistic and achievable or else you will simply end up discouraged.

Saving Money for Emergencies

Having an emergency fund for unexpected expenses that come up is another financial skill many people never learned. It may be that it is an emergency car repair that has you unable to go to work or take your kids to school or some sort of medical emergency that will cost thousands of dollars even with your health insurance. Many studies show that most people have no dedicated savings sufficient to even be able to pay an unexpected $1,000 bill, which is one reason it is so important to have some money set aside that you do not touch unless it is truly an absolute emergency. Otherwise, you could find yourself in a debt trap if you are forced to put it on a credit card or take out a personal loan and create an even bigger problem for yourself long term by getting into a downward spiral of debt.

Planning for Retirement

You may not even be thinking about it right now, but everyone will retire (or want to retire) at some point in their lives. However, virtually any expert will tell you that Americans have a serious retirement savings shortfall. Saving early and saving often is essential when it comes to saving for retirement. There is power in compound interest, and the longer you allow your retirement savings to grow, the more you will have at the end of the road. Many retirement savings options are tax-deferred or tax-advantaged, so there are serious incentives for saving for retirement, aside from simply having the piece of mind that you won’t be eating Ramen noodles and doing manual labor into your late 70’s.

Contact Signature Servicing

Money management skills are essential if you are to be able to live the life you truly want to. However, everyone has to start somewhere. You may be up to eyeballs in debt by the time you realize you need help with your money management skills.

If at some point, your debt problem becomes too difficult to manage on your own, debt settlement companies like Signature Servicing can help. If you think that you may need or benefit in any way from our services, please contact us at Signature Servicing at 844-440-7654 or email us at info@signatureservicing.com. We know financial matters are a personal subject, so we take your privacy seriously.