TR EMERITUS

By James Oh, Lifestyle Correspondent

It is a popular belief that you need to stress your dollars only when the economy is in a crisis. However, the truth is that we need to embed financial management skills in our personal lives regardless of the state of the economic affairs. There is no way that you can avoid from dealing with money in life. As such, we need to realize and acknowledge the importance of this matter in our lives.

IN this article, I have listed some of the steps to develop sound financial management skills:-

1. ENSURE FINANCE IS AT THE HEART OF DEVELOPING YOUR VISION AND STRATEGY

Without such commitment, you will not only run the risk of flawed planning and poor decision making, but also fail to embed sound financial principles into the management of your daily life as a whole.

Do not worry about making mistake as long as you learn from it. Always learn from the master who have a proven track record. Keep on trying out until you truly apprehend its implications in each different scenarios. Here, repetition is the key of mastery.

2. START NOW!

It is never too late to begin. Act now to kick-start good financial management in your life. No matter what the current level of your financial management skills, there tend to be potential – almost certainly huge potential – to improve. 

You must want good financial management to be at your heart, be committed to it and be consistent in promoting and supporting its application. It takes time to build an empire, so do financial management skills.

If you understand the compound interest implication, then you will know the snowball effect on money. Life passes quickly and you might need extra money for the unexpected and the long term. In light of today’s global financial crisis with its high rate of inflation, managing your money effectively has become exceptionally important than before.

3. REINFORCE THE BEHAVIOR THAT YOU WANT REPEATED

We must acknowledge and realize the fact that most of stuff we bought is based on emotion rather than rationale. As such, you must not be trapped into it so frequently that it becomes part of our habits. In order to overcome it, you must ask yourself seriously whether you really need it before buying. You must consistently put it into practice and through such repeated positive reinforcement, you will be amazed at its spectacular result.
4. DO NOT CONSTRUE IT WITH CUTTING BACK

Learning to acquire sound financial management skills also includes learning when you can make cutbacks. Before that, you need to scrutinize your list of monthly expenses and cut back those expenses which you do not need. Thus, that unspent sum of money may either go to your saving accounts or to reduce your loan.

As a result, you will have more money to spend in the long term. Alternatively, you may use that saved amount of money to spend on higher quality product, which in term cost you less in the long run.

5. CONSOLIDATE YOUR LOANS

Debts can kill unless you can manage them well. If you are overwhelmed by debt, then consolidation of your loans is most likely to be a feasible solution to you. If you have a good credit rating and negotiation power, you will most likely be able to obtain a more attractive and reasonable interest rate from lenders.

In this case, you must make sure that the loan with the lowest rate of interest be utilized first. To reap its fullest benefit, you must also match your payment schedule with your cash inflow. Ultimately, it will leave you with more money at the end of the month to either enjoy a good lifestyle or reduce your other debts.

6. TAXES : KNOWLEDGE IS POWER.

Pay attention to new tax laws. They are like a moving target – changing annually.  Make full use of the knowledge to your maximum advantage for instance you make sure that you claim all deductions that you are entitled. Proper tax planning also will help you to reduce your tax liability.

7.   SAVING – THE BEST INTENTION

It is always the best practice that we set a certain amount to our saving accounts. In this case, you are more likely to live within your budget while ensuring that a portion of your income is safely held in savings. You never know when some extra cash will come in handy.

 
8. KEEP IT FRESH AND CURRENT

This means regularly reviewing the skills to keep abreast so as fulfill tomorrow’s needs. It means acquiring new ideas to use the present resources to improve your wealth.

9. KEEP IT SIMPLE

The key to success is being able to get things done. Its role and principles must be easily understood and the benefits clearly defined. Finance needs to be seen as part of your daily solution and not part of your problem.

So, practice the steps that I have given you and, not only will you gradually make progress. Ultimately you will be able to face the economic crisis with an increasing confidence. 

Please feel free to share with your friends who intend to pursuing sound financial management skills.

Wishing you success,

James Oh

Other articles by James Oh:

>> How to retire gracefully

>> Steps to overcome major obstacles of staying healthy (Part 2)

About the Author:

James Oh is an accountant by profession and he works as a Financial Controller for more than 10 years with several companies in Singapore and Malaysia. He is a full member of the Singapore Institute of Director and he also obtained a LLB (Law degree) from the University of London in 2003. He is happily married with 3 loving kids.

James blogs at http://liftyouup.blogspot.com

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