Managing money is a complex process, marked by significant challenges and a constant uphill struggle. Or is it?
While it may be true we all face financial obstacles during the course of daily life, successful personal money management boils down to a few basic principles. When financial difficulties do arise, the root of the problem can often be traced to a breakdown in these universal, fundamental cash management standards.

Each person’s financial circumstances are unique, so budgeting and controlling cash flow are individual pursuits. However, irrespective of a person’s income and financial obligations, holding to proven money management strategies most often yields the best path to financial security. If your personal financial health needs a boost, use these three important rules to find your financial stride and steer clear of money problems.

Financial Knowledge is Like Money in the Bank

Getting started in unfamiliar territory can be an intimidating prospect, so it is unrealistic to expect yourself to manage money like an expert – especially with limited experience successfully controlling household cash flow. But while you may not start with a full set of money management tools, the task is ongoing, so there is always time and opportunity to expand your financial understanding.

Over time, as your credit interactions grow more numerous and diverse; lessons set-in, reinforcing your financial knowledge and preparing you for wide-ranging financial circumstances. Making good on your first loan, for example, gives you knowledge and confidence needed to manage future mortgages, auto loans and other forms of installment credit. Success managing a revolving balance, on a store card or major credit card, adds another layer of financial savvy to your body of experience. Each positive financial outcome is like money in the bank, boosting your credit rating and setting the stage for lifelong access to credit.

Personal finances are multi-faceted, so learning the ropes may call for formal instruction. Community and government-backed groups offer free seminars about managing money, particularly in the wake of the major financial collapse experienced a decade ago. These and other free resources address everything from balancing a checkbook to amortizing a mortgage. Adult learning, through universities and technical colleges may also prove insightful – especially for those seeking deeper understanding about a particular aspect of finance (small business loans, mortgages, investing for retirement, etc.)

Successful Money Management Relies on Financial Discipline and Personal Resolve

Your commitment to financial health is an important tool. Without it, responsible spending choices and disciplined decision-making can falter, leading to irreparable financial damage. A formal budget can help reinforce personal resolve, outlining exactly where your money goes and highlighting better ways to manage money.
Creating a budget ultimately gives you a financial blueprint to follow, but the process also digs deeply into household money matters, bringing financial inconsistencies to the surface. As you break spending into categories to compile budget information, for example, an unmanageable debt or unsustainable spending habit may be identified up-front – immediately showcasing room for improvement.

As a budget comes together, discretionary spending is invariably put to the test. Your ability to resist impulse buys and make only practical, planned purchases stands at the heart of effective personal money management. If maintaining financial discipline and spending resolve poses challenges:

– Leave credit cards at home when you go shopping
– Impose a 48 hour waiting period – allowing time for you to review prospective purchases
– Save ahead for a purchase and pay cash when you can afford it

Accountability Reinforces Financial Success

Personal financial concerns carry-on for a lifetime, so effective money management includes a look at the big picture. Your financial attitudes and goals contribute to personal outcomes, so taking stock of your financial values helps forge a prudent path. Are you driven to own a home? Is the cost of higher education on the horizon – for yourself or a child? Is early retirement an option for yourself or your spouse? Answers to these and other important financial questions help you establish benchmarks for tracking progress toward your financial goals.

With milestones in mind, financial accountability includes periodic review of your household finances. Some analysts recommend an annual once-over, but more frequent scrutiny only helps refine your understanding. Conducting regular financial assessment serves as built-in accountability, enabling you to make financial adjustments – before problems arise.

Although daily life includes financial considerations and concerns, effective personal financial management is based upon three essential principles. Armed with knowledge, discipline and accountability, it is possible to move toward important financial milestones, without sacrificing your standard of living.