By Fabián Narváez Tovar
Managing your personal finances might be, for many of us, a hassle. Dividing your income to pay bills, invest, save or to pay extra expenses, isn’t something that everyone is willing to do periodically. However, to be a good financial administrator it can become a great tool when acquiring property, like a house or a car, or how to deal with difficulty economic times.
In order to achieve that you do not need to be an expert. You just need to have some basic accountability skills, but more importantly, knowing how to maintain the necessary discipline so you can plan all the financial operations that you pretend to make.
Below is a summary of the recommendations that I’ve gathered from all the specialists that taught me how to manage money correctly:
1.- Use Your Emotional Intelligence
Contrary to popular belief, many studies have proven that each person’s intelligence level has few correlation with the amount of wealth they might achieve. That means, people with high IQs can make mistakes when it comes to money management. This is because people’s success aren’t necessary the brightest in terms of real knowledge, instead they have developed a successful emotional intelligence. In this connection, attitudes such as transforming failures into success, knowing and handling risks, being modest and living plainly, will be determinant when managing your personal finances.
2.- Being Organized And Disciplined
One of the requirements to become a good financial administrator is, without a doubt, being organized. For that, experts recommend to make a balance sheet and calculate your net worth, your net income, your recurring expenses and pending debts, if there is. “Being an organized person is fundamental for a good administrator. This isn’t based on theoretical knowledge, but on being able to develop great organizational skills.
“Being thrifty will lead a person to invest in a regular way, even if the markets are all in decline”, experts say. To achieve this goal, the individual must be capable of not letting himself get carried away by the desire of buying, unless it’s for a real necessity. Not using your credit card as additional money, is another recommendation experts make.
4.- Know How To Distinguish Risk In Each Investment
When people panic, for example, in times of crisis, it is essential to remain calm when administering finances. In this sense, distinguishing risk in each investment you make will help to achieve a greater equilibrium and profitability. “From what I read and see, I always perceive when to buy when people are selling and viceversa”.
Instead of giving into temptation and invest in the trending actives, learn how to buy in a falling market and sell when appropriate. “A good administrator is someone who is always informed and does not ignore the destination of their personal finances.” “The important thing is to be always informed, it is essential that you do not process the information but to use it instead. Knowledge and feeling is the key to success”
6.- Design a Flexible Plan To Achieve Your Goals
Having a financial plan and following is great, but also to be willing to change it if conditions may require so, is another recommendation that specialists make. The good administrator must plan and trace the objectives that one wants to achieve by managing their money, for example, to make a trip or to buy a house or a car. Once you have defined your objectives, the person will be able to get an idea of how much must one save or spend monthly in order to achieve their goal.
Fabián Narváez Tovar is the CEO of Angolfo, he has a bachelor’s degree in Public Accounting and has a Master in Business Administration.