Prince or pauper, it doesn’t matter how many letters come after your name as we all need to manage our money. Sure, some of us have bigger bank accounts than others but even those rich kids in Surrey need to worry about what they will do when the need to use their own money to pay for things. Given this fact of life, here are five reasons why you need to manage your money. Either take this advice and stash away a lucre or two for a rainy day or don’t and find yourself on the dole queue in no time at all.
Reason 1: It Takes Away the Uncertainty
Most of us were not born on a posh estate with millions of quid in a trust fund. Let’s face it, even many public school toffs don’t have this advantage. Just look what has happened to many of the Duke and Duchesses in our fair land.
If you are a Royal Duke, then life is good as the Queen has plenty of cash to go around but for the non-Royals life is a bit more complicated and many of them have had to sell their grand estates and even get jobs.
The lesson here is that you need to manage your money as you never know what might happen. As such, you need to set financial goals and make sure that you keep a close watch on your finances.
To start you want to put together a comprehensive list of your bank and credit card accounts. Also, you want to track your earnings as this will help you to determine that your expenses are not outpacing your income.
From there you also want to categorise your expenses as this will provide the transparency needed to put a proper budget in place. Having a budget is of the utmost importance as this will help to take away the uncertainty when it comes to knowing your true financial position.
Reason 2: It Helps You Prioritize
Whilst it is easy to put together a budget on paper, it is another matter when trying to put it into practice. This is because you will need to prioritise certain expenses over others. For example, you want to make sure you pay your landlord – or you could find yourself out on the street.
Managing your money by prioritising also helps you to question whether that expense – for example a new pair of trainers – is something you really must get at this moment. In the long-term, this helps you to develop the financial acumen need to make sure you have enough cabbage when you really need it.
Now, one tip here is to not get overwhelmed. It’s not like you need to go home every night and could every pound note in your pocket. In fact, you don’t want to become a miser like Scrooge. However, you will need make sure you are balancing your budget and meeting your goals over the long run and the only way to do this is to prioritise.
Reason 3: Building Wealth
Given the uncertainty created by Brexit, this could never be more important. In fact, some economists predict that Brexit could kick off a deep recession in the U.K. Whilst we don’t want to get into the politics of the decision, the important thing to do is to make sure that we have a plan to manage this period of uncertainty. Doing so will make sure that we are on a path to prosperity whilst others are floundering.
As such, proper management of your money will help to ensure that you can build wealth over the long-term. This starts by having the discipline to save money and then knowing how to identify the proper investment vehicles. Going through this exercise will set up for success and if done right, then your money will be able to grow on its own.
Reason 4: You’ll Be a Pensioner Someday
Whilst you only live once, some of us confuse ‘enjoying life to the fullest’ with being prudent financially. The two are not mutually exclusive; however, it will require some tact to balance the urge to spend now instead of saving for later.
With that in mind here is a bit of motivation – you will be a pensioner someday. As such, you need to make sure you have enough savings in place to ensure that you are not a burden to your family. If not then you might end up in some old age home with little prospect of enjoying your golden years.
What’s the lesson? Learn how to manage your money before it is all gone. Doing so will help to plan for retirement and for economic uncertainties. Keep in mind that even those in the upper classes need to take this to heart as there become a point when even Dukes need to consider cutting back.
photo credit: ccPixs.com 3D Budget Pie Chart via photopin (license)