When it comes to your life and money, the adage “a little knowledge is a dangerous thing” does not apply. To the contrary, a little knowledge can be powerful. I know the original intention behind the quotation was to advise against acting rashly with only a small amount of knowledge. The saying advocates for greater knowledge before action. I’m on board with that.
But too often people make the mistake of thinking that because they’ve “always been bad at math” or were “never good with money,” they get an automatic pass on making good financial decisions. That is a cop out. Instead, if you were never good with math or with money, remedy that shortcoming.
The truth is, money management is not rocket science. Approaching your financial education in baby steps, you can get to a decent level of financial literacy faster than you might think. So, don’t be lazy or assume that your past performance with money is any indicator of your potential future performance. Instead, resolve that you CAN learn and improve your skills. Some areas might require professional help, but the basics of household financial management are accessible with a small amount of effort.
Where to start
The best place to start managing your household finances is by building a budget. Many people panic at the mention of a budget, because it sounds an awful lot like diet. But don’t go there.
Instead, start with a simple task: track all your expenses. ALL of them. Ideally, you should do this for a few months but if you’re anxious, just do it for as long as you can stand it. Manage it closely and track where every penny goes. Armed with this information, you can start tallying up your expense categories and examining trends. There is great empowerment in doing this exercise. I cannot stress how important it is to know where all your money is flowing.
Build an emergency fund, get out of debt
Once you have a solid understanding of what is happening with your household income, begin building your emergency savings cushion. The standard recommendation is to have three to six months of household expenses in savings — but start with $500. Achieve that and then up your goal to $1000. Working your way up in increments will help you maintain momentum and realize levels of success in reaching your goal.
The next task is getting out of debt. Now that you know where your money is going, you can identify where to trim expenses to free up funds to direct to paying down debts. The best process for doing so is beyond the scope of this brief article, but the point is just get started!
Build on your successes
Explore the many free on-line resources to help you with these beginner steps. Once you commit to the process of improving your financial literacy, your confidence level will grow. Before long, you will be equipped to handle your investments and other financial matters with ease!
The key is to start small and learn the basics. Getting the household financial management in order may take several months to really click, and that is okay. If you apply yourself consistently and steadily, you will see results. As your confidence grows, your knowledge will grow, and this cyclical paradigm will empower you to achieve successful financial management.
Why is this so important?
Women are often stereotyped as lacking knowledge and ability in math and finance. I object! It’s been part of my life’s ambition to remedy that stereotype! Women should not feel incapable of learning about money. Too often, this leads women to rely on the men in their lives to handle their household financial affairs. Sadly, that can lead to women getting taken advantage of and left with little to nothing to show for it.
Don’t do that. Women, empower yourself with a little financial knowledge. And then empower yourself with a little more. Build on your knowledge over time and watch your confidence soar.
*This article was previously published in WNC Woman magazine.
Feel empowered about your finances? Share below, or if you prefer, you can email me at Dawn@SimpleMoneyPro.com. Or if you want to start a discussion with some like-minded friends, join the free SimpleMoney Community on Facebook to share your ideas!
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