Financial management is the science of managing money wisely while achieving current and financial goals. But to learn this science, we need to follow some management principles. They help us get better in how we handle money, expenses, income, debt, and everything related to money.
An interaction with significant financial management principles can help you make considerable life changes. Stable finances lead to you a better tomorrow and a safer future.
Think rationally about money
It is really of no use if you learn the thousands of principles, they are worthless if you are going to take emotional decisions. Technically, emotions have nothing to do with the money related things. Even if you are doing it for the family, the right type of prioritisation is necessary.
- You want to invest for your kids every month for their future. But this month, your child wants a birthday gift, which may make you compromise in that monthly amount. What should be the decision in such situations? Either you ask the kid to wait for some time, or get a cheaper gift or say NO directly and save the money as usual. The principle of rationality says that you should not listen to your child for his well-being in the future.
- A marriage anniversary luxury candlelight dinner can be replaced with a home-cooked meal and a calm home atmosphere. If you both have to save for a deposit to get the best deals of car loans in Ireland, financial principle asks you to avoid the expensive dinner. Can you do that? Well, it has to be done.
Rational also denote strong determination. It means, never stops chasing a financial goal because of the distraction caused by temporary desires. A weekend trip sounds more impressive than investing money monthly in mutual funds, but hey is the logic. Of course, weekend fun is fine, but you can plan it later or downsize it with a smaller budget.
First, improve current situations then exploit new financial products
Money management principles say it is foolish to explore more and more financial products if you are already making mistakes. It makes the financial life worst and derails your finances.
- Think of the delayed payments of credit cards? You want to get a new credit card without planning properly to settle the current pending obligations. The world knows how monstrously the interest rate increases on credit cards and turns things into a worst-case scenario.
- Always make necessary changes to rectify the past mistakes in the personal finances before you move further dreaming of another financial product. Perhaps this point also has to do a lot with self-discipline. Without that, no one can follow a prosperous, peaceful life.
- In case you have a bad credit score and want to borrow funds for a car purchase, first, try to gather a bigger deposit. There are options available on car finance for bad credit people in Ireland. Take the deals with customisation as that offers smaller installments, pays them on time, and improves the credit score.
The actual idea is that it is foolish to keep moving on with further financial decisions without doing something for the existing issues. To such people, the money world is never able to offer lucrative deals, and at the end of the day, your chances of revival get weak.
Greed and investment never walk together
The haste to get rich faster and buy a luxury materialistic life makes people take careless decisions. Investment is a promising tool to get a big profit in a small-time but not for all but only for the smart and patient players. Usually, people get either over-confident or careless about the consequences of investment decisions.
- Never invest more than your risk appetite because that is nothing but just an act of foolishness that takes you to destruction. Once you face a loss, sometimes it is so big that revival becomes difficult.
- You only go gambling with your destiny if you forget the tolerance limits of your personal finances. Such things take you nowhere. In fact, they only leave with the bad incidents of financial life that cause pain and restlessness.
- Always take the advice of a financial advisor and apply it in accordance with your circumstances. Do not forget to pair the advice with future consequences of the decision.
- To play safe invest in multiple products because every product is prone to some market generation threats and conditions.
Greed to get faster results to make people invest in the options that are not suitable for their situations. It is something that cannot be done for the long-term. To get a higher return on investment, it is not wise to forget the factor of vulnerability. A right investment decision is the one that gives an easy acknowledgment to the current conditions of the investor. Also, it is essential to pay heed to future possibilities.
The above principles are ubiquitous in their significance, and they can help you irrespective of geographical boundaries. But there is something familiar in all of them, they all want you to apply logic and only logic in every financial decision you make. It is not only a safe play strategy but also a morally correct behaviour towards your personal finances.