Why Every Family Needs to Sharpen its Money Management Skills

Besides this, it has introduced us to the idea of delayed gratification, which means putting off purchases you do not need today to a future date.

We've learned the importance of being financially prepared to effectively counter any adversity. Mainly to hold enough, i.e. at least 12 to 24 months of regular monthly expenses, including EMI on loans as a contingency reserve, also known as an emergency fund. While investing, do not make ad hoc investments; instead, focus on the best-suited asset allocation and diversify investments wisely in the journey of wealth creation.

It has also taught us to keep our debt under check so that it does not become a debt burden. The importance of living within your means and having better control over the way we manage the finances.

The pandemic introduced us to the importance of having an optimal life insurance and health insurance cover to indemnify risk involved in the journey called life. Also, the need for all family members to sit down together and talk about their outlook towards money, set S.M.A.R.T (Specific, Measurable, Adjustable, Realistic, and Time-bound) financial goals (viz. buying a dream home, a car, a children's education needs, their wedding expenses, a family vacation, retirement, etc.) that can be planned well with views and contribution (directly or indirectly) from every family member.

Do you know why a few individuals and families are more financially successful than others? It is their adroitness in understanding the nuances of money management, drawing a quick course correction when on the incorrect path, and making smart investments that keep them in sound financial health at most times.

You see, do not allow the dark clouds of pessimism amidst the COVID-19 times to pull you down. Learn certain clever money management skills to secure your family's financial future. Also, thrust aside some of the behavioural biases that may pull you down.

Here are some of the common biases that can affect money management...

• I do not have enough funds to invest - Well, if you have constantly been saying this, start budgeting carefully and keep track on your expenses, you can save and then invest wisely.

• I lack financial planning skills - If you don't have the expertise, be open to learning the art and science of prudent money management and seek help from a professional financial planner. If you do not have a financial plan in place, you may not accomplish your financial goals. "A goal without a plan is just a wish" - Antoine de Saint-Exupery

• I do not invest in stock markets - If you have heard of stories people losing money in the stock market or you have had a bad experience yourself, do not get anchored to it. Learn from those mistakes and move on. It is been proved that equity as an asset class, over the long run, is one of the best avenues to counter inflation and build wealth.

• I do not believe in asset allocation - If you stick on to only one asset class, you may lose out on the seemingly obvious gains that diversification offers. Asset allocation is the cornerstone of investing and may help mitigate the risk in the journey of wealth creation.

• Doing self-research and taking decisions or familiarity bias - This is good to an extent if you are familiar and know how to go about conducting thorough research to make prudent investments. But if you aren't, then then the self-research and making investment decisions based on it and/or on unsolicited tips may not be a sensible approach to build wealth.

• Status quo bias - Procrastination compromises the compounding effect on your investments. Remember, the early bird always gets a bigger worm. In financial planning parlance, the earlier you start saving and investing could potentially build a bigger corpus to fulfil your financial goals. So, you should not delay making investments early on in life.

While most individuals and families consider themselves to be rational or prudent in their money management, often the pros and cons of their financial decision are not evaluated wisely and display behavioural biases. This harms the family's financial well-being in the long-term.

Therefore, break away from these behavioural biases before it's too late; train your mind to be better at money management.

Equip yourself with prudent financial education in the interest of your family's financial well-being.

PersonalFN's latest initiative, the "Certified Family Guardian", offers you an exclusive e-course separated into eight modules with 24 extensive videos that will teach you...

• ✓ How to make a Budget and Design Your Cash Flows

• ✓ How to plan for your Key Life Goals in a prudent manner

• ✓ The right approach to Insurance Planning

• ✓ Prudent ways to plan your and your family's investments

• ✓ Tested ways to Retire Rich

• ✓ How to go about sound Estate Planning

• ✓ How to ensure that your loans do not become a burden

• ✓ The secrets of investment gurus ( to apply for your financial success)

All you need to do is dedicate just five hours spread over three weeks.

It also offers host of other benefits to help you make informed investment decisions. Read here for complete details

It is time to become the "Financial Guardian" of your family and learn the nitty-gritty of financial planning and investments -- become your own financial planner to brighten up your financial future.

PersonalFN's "Certified Family Guardian" e-course is a special initiative that can help you with all the relevant tools and learning modules needed to get better at money management and achieve your financial goals.

If you wish to evolve as your family's guardian and build a better financial future, what are you waiting for - enrol for "Certified Family Guardian" course today!

Empower yourself with the weapon of Knowledge!

Warm Regards,
Mitali Dhoke
Content Writer

Join Now: PersonalFN is now on Telegram. Join FREE Today to get ‘Daily Wealth Letter’ and Exclusive Updates on Mutual Funds