Do you need to understand your personal finances? The answer is yes! Understanding and owning your finances is imperative in any stage in life. It’s like having a reliable boat, equipped to allow you to navigate your life’s journey. You will encounter choppy waters and very strong winds, even storms, as well as sunny, calm days of coasting. Owning your finances is the basis of a well-rounded life of giving and receiving in your personal, professional, and social realms.
So how do you go about understanding and owning your personal finances? You have to see yourself a bit like a small business. You must understand and track your income and your expenses. There are several apps, many free, you can use.
Once you have a good understanding of how much money your have coming in (e.g. salary, second jobs, freelancing, parents’ gifts, loans, etc.) and you are tracking every cent that goes out (e.g. rent, car payments, insurance, food, utilities, clothes, gym membership, etc.) you have a clear picture of where you are today. Is this enough? No.
You need to plot where you want to be in your life in two, five, and 10 years. Understanding and managing your financial capacity throughout these milestones will help you reach these goals. Tracking your spending provides clarity as to where you are today and what potential you have; also, it allows you to set goals and where you want to be personally and financially in the years to come. Now you are ready, if you chose to, to seek guidance from a financial advisor.
A financial advisor is a certified professional that can provide guidance just like a sailing instructor can provide guidance on how to navigate your boat.
It is worthwhile to understand the difference between a financial adviser and advisor beyond the grammar. According to the US Financial Industry Regulatory Authority (FINRA), terms such as financial adviser and financial planner are general terms or job titles used by investment professionals and do not denote any specific designations. FINRA describes the main groups of investment professionals who may use the term financial advisor to be: brokers, investment advisers, accountants, lawyers, insurance agents, and financial planners. Learn more about these designations and how to select the right one for you here.
Experts such as Suze Orman, whom USA Today calls, “a force in the world of personal finance,” provides exceptional guidance on managing your finances, using tools to understand your finances better, selecting a financial advisor and plotting a roadmap to your financial and professional success.
Understanding and managing your money will both ground you and let you dream big as you set out on your life’s journey. So go out there and dream big!
Marina Theodotou is a Public Private Partnership Strategist, lecturer and blogger with global experience who inspires teams to carve new paths in womenomics, entrepreneurship and sustainability. www.linkedin.com/in/marinatheodotou