Simplify Your Finances… Improve Financial Security

Keep personal finances simple… and never, ever be afraid of finance!

I learned some basic rules over the years which are as follows:   
1.  Understanding - One number can have several meanings.|Be careful not to take money related advice out of context.
2.  Trust - People that compile numbers don’t always tell the whole truth.  I would not trust any one individual to provide financial advice 100% of the time.
3.  Dynamics - Numbers are always changing.  Don’t ever think you have your personal finances figured out.
4.  Focus - It is not about the numbers.  Financial security is mostly the result of focusing on life factors not directly related to finance.

Confused?  Please read on.

1.  Understanding:
Take personal finance seriously.  If uncomfortable, don’t ignore it, but get some help.  However, in the end you make the final decisions.  If your natural tendencies do not favor numbers or financial factors, then rely on your strengths to make decisions.  Those strengths may be your strong intuitions, good common sense, or the ability to effectively utilize other people’s ideas.  Do whatever you must to gain a comfortable understanding of your personal financial situation.

2.  Trust:
Obviously you need to trust some people some of the time.  Just be careful not to put all your eggs in one basket.  There are two types of people to watch out for here; (1) people working in financial fields who are borderline dishonest,  and (2) financial expert friends or family members who may have the best intentions but are not really qualified to provide financial advice.  Unfortunately, many so-called financial experts today are nothing more than trained sales people who are selling a process they don’t understand themselves.  If you have a strong financial aptitude you will likely be able to identify the imposters.  If you don’t have a strong financial aptitude you will have to take a bit more time and rely on other avenues to assist in the financial decision making process.

3.  Dynamics: 
The major components of personal finance are changing constantly.  This cannot be avoided.  Even if a person has a stable income, predictable expenses, and great money handling habits, there is still inflation, interest rates, and market return variability that the individual has absolutely no control over.  For these reasons, whatever economic plan you have, it works best if it is flexible.  Another tip is to guard against complacency and periodically re-assess the status of both controllable and non-controllable economic factors and adjust your plans accordingly.

4.  Focus: 
By far the most important rule in managing family finances.  Comfortable financial situations don’t happen by accident, at home or in business.  Good financial things happen when people pay sufficient attention to the subject.  It doesn’t matter whether you earn a lot of money or in some cases none, whatever the situation is, it will be remarkably better if you put the upfront effort into planning and following through with a financial plan.  It doesn’t matter what your financial aptitude is as long as you know where you stand.

You don’t need a lot of money to enjoy financial security,  just be in control!