MONEY OBEDIENCE

How to get to know your financial self

If you read personal finance books and blogs you get lots of great ideas on how to handle your money. There are time-honored rules – like spend less than you earn – and there are tons of ideas how to comply with such rules. You will get or keep your finances in good order when you follow these rules and when you adopt some of these ideas.

Some ideas work very well, other ideas don’t work so well. Some ideas sound stupid to you, but when you apply them you actually get good results. Then again, the next person may have a totally different experience than you. The ideas that work for you, don’t work for her. How does that happen?

It happens because we are all individuals. We respond to different things differently. What works for one, is totally useless for another person. Sure, there are some general ideas that work for most, but even these generally ideas are not worth the time and effort for some. That is why the term personal finance has got “personal” in it.

You have to figure out what works for you as an individual. You have to do your part to figure this out, whether you try to figure it our on your own or with somebody else like a trusted person or a financial planner. There are a few ways to find out.

1. Trial and error. Try different things and see how that works. For example, when you want to track your expenses, sign up at mint.com where many of your expenses are tracked automatically. If you miss too many of the expenses that you would have to enter manually, enter all of your expenses manually and skip mint.com. You could be the person who thrives on exercising discipline 100% of the time. Then try a free budget planner like budgetpulse.com or our own free budget planner.

2. Gut. Get the feel for personal finances rules, ideas, and techniques. For example, inform yourself about the different ways you can save for retirement: 401k, traditional or Roth IRA, etc. Choose the option that feels right to you. It may not be the best option from an objective point of view, but if it feels right to you and if it works for you, follow it.

3. Introspection. Learn about yourself to find out how you respond to different ideas and techniques. For example, if you are a numbers person you will find many tools on the internet that help you make financial decisions. If you are not a numbers person you will have to work with somebody, who can translate the numbers that come up in personal finance for you. Then you can get into a position to make better financial decision yourself.

Whatever you do, your actions and decisions will be your own business. You are in the driving seat. You have to know yourself so that you can determine what is good for you.

How have you gotten to know yourself? What have you discovered?

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Also check out our own questionnaire about your financial habits!

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Posted in personal finance