Money Management

10 Signs That Show You Are a Good Money Manager

October 2, 2023

Effective money management is a skill that not everyone possesses. Managing your money well can enable you to take control of your finances, achieve your financial goals, and secure a stable future. While it’s common for people to prioritise earning money, being a good money manager involves much more than just accumulating wealth. It’s about making informed decisions, maintaining a balanced financial lifestyle, and preparing for both short-term needs and long-term aspirations.

In this article, we will explore 10 signs that indicate you are a good money manager.

1. You Can Create and Stick to a Budget

A budget is a tool that helps you track your income and expenses, and allocate your money according to your priorities. Having a budget is not enough; you need to follow it consistently and adjust it when necessary.

If you have a budget in place that you consistently stick to, it demonstrates that you understand the importance of managing your finances wisely.

While there may be occasional adjustments to your budget to accommodate unforeseen expenses, your awareness and proactive approach signify responsible money management.

2. Your Debt Level is in Check

Debt can be useful when used wisely, but it can also become a burden if not managed properly.

Good money managers handle their debts responsibly by paying them on time, prioritizing high-interest ones, and avoiding unnecessary borrowing.

They also strive to reduce their debt as much as possible and maintain a healthy debt-to-income ratio.

3. You Can Distinguish Between Needs and Wants and Make a Conscious Choice

Needs are the essential things that you require for your survival and well-being such as food, shelter, health care, etc. Wants are the things that you desire for your enjoyment and satisfaction, such as entertainment, travel, hobbies, etc.

Good money managers know the difference between these two categories and make informed decisions on their budgets and goals. They do not spend impulsively on their wants at the expense of their needs or savings.

4. You Save Regularly and Invest Wisely

One of the key aspects of good money management is the ability to save and invest your money effectively.

Saving means putting away some of your income for future purposes. Investing means using your money to buy assets that can generate income or increase in value over time.

If you have a habit of saving money every month and investing it wisely to grow your wealth and reach your long-term goals, you are on the right track. You also have a clear savings plan, such as saving for emergencies or retirement, and an investment strategy that matches your risk tolerance and time frame. These are signs of a good money manager.

On the other hand, if you are unable to save enough or invest properly, you are not managing your finances well.

5. You Have an Emergency Fund in Place

Unexpected events and expenses can happen at any time, and they can disrupt your financial stability. That’s why having an emergency fund is a crucial part of good money management.

An emergency fund is a separate account that you use only for emergencies, such as medical bills, car repairs, job loss, etc. It shows that you have planned ahead and prepared for the worst-case scenarios. It also helps you avoid tapping into your savings or investments when you face a financial crisis.

Good money managers have an emergency fund that can cover at least three to six months of their living expenses.

6. You Regularly Review Your Bank Statements, Investment Portfolios and Credit Reports

Another sign of good money management is the habit of reviewing your financial records on a regular basis. This includes checking your bank statements, investment portfolios, and credit reports for accuracy, performance, and potential issues.

By doing this, you can monitor your cash flow, track your net worth, optimise your asset allocation, and spot any errors or frauds.

You are a good money manager if you review your financial statements and reports at least once a month or more frequently if needed. You are also a good money manager if you take corrective actions if you find any problems or discrepancies.

Read Also: 10 Common Banking Fees

7. You Live Within Your Means

A common cause of financial problems is spending more than you earn. This can lead to debt, stress, and unfulfilled goals.

However, if you are living within your means, you are showing that you are a good money manager.

Living within your means means spending less than or equal to what you earn. It also means avoiding unnecessary expenses, such as buying things you don’t need or can’t afford, or paying for services you don’t use.

Living within your means can help you save money, invest more, and avoid debt. Good money managers live within their means and have a positive cash flow.

8. You Find Yourself Offering Good Financial Advice to Others

A clear sign of being a good money manager is when others seek your financial advice. When friends, family members, or colleagues turn to you for guidance on financial matters, it shows that you have a high level of proficiency in money management. Here are some reasons why this is an important aspect of financial competence.

It demonstrates trust and confidence: When people seek your financial advice, they are placing a significant amount of trust and confidence in your financial acumen. They believe that you have the knowledge and expertise to help them make informed decisions about their money. This trust depends on your demonstrated ability to manage your own finances effectively.
It reflects your financial success: Offering sound financial advice is a testament to your financial success. It suggests that you have not only managed your own money well but have also attained a level of financial stability and security that others aspire to attain. People are naturally drawn to those who have achieved success in areas they strive to improve, and this includes personal finance.
It signifies strong financial knowledge: Your ability to provide sound financial advice reflects your deep understanding of financial principles and strategies. You have likely spent time educating yourself about various aspects of personal finance, such as budgeting, investing, saving, and debt management. This knowledge allows you to offer practical and well-informed recommendations to those seeking your guidance.

9. You Actively Educate Yourself on Personal Finances

Personal finance is a broad and complex topic that covers many aspects of managing your money, such as budgeting, saving, investing, debt, taxes, retirement, and more.

To be a good money manager, you need to have a solid understanding of these concepts and how they apply to your specific situation.

However, personal finance is not something that you learn once and forget. It is something that you need to constantly update and improve your knowledge on, as the financial environment and your goals change over time.

Therefore, actively educating yourself on personal finances is a sign of a good money manager. It shows that you are curious, motivated, and committed to improving your financial literacy and skills.

It also helps you make better financial decisions, avoid common mistakes, and achieve your financial goals.

10. You Have Financial Goals

Having financial goals is essential for financial success. It shows that you have a clear vision of what you want to accomplish with your money and why. Whether it’s paying off your student debt, building an investment portfolio, or saving for a holiday, having financial goals can motivate you to manage your money well and stay on track.

However, having financial goals is not enough; you also need to have realistic and actionable financial plans to achieve them. Financial plans are the steps that you take to reach your financial goals by allocating your resources accordingly.

For example, if your goal is to move out of your parents’ house after graduation, your plan may include setting a target amount, choosing a savings account, contributing regularly, and investing wisely.

Having financial plans can help you turn your goals into reality and measure your progress along the way. If you have a plan underway to achieve your financial goal, then hats off to you. You are a good money manager.

Bonus Tip

Thank you for reading this far and we have an extra tip for you:

You are a good money manager if you know your bad money habits and work to improve them.

We all have some bad money habits that can hinder our financial success, such as impulse shopping, overspending, or accumulating debt. However, the first step to overcoming them is to acknowledge them and understand their causes. Then, you can create a plan to change them and replace them with good money habits.

For example, if you tend to shop when you are bored or stressed, you can find other ways to cope with these emotions, such as exercising, meditating, or talking to a friend. You can also avoid triggers that tempt you to spend, such as browsing online stores, watching ads, or visiting malls.

Wrapping Up

Congratulations if you have several or all of the signs listed above. You are on the right track to achieving financial success. Managing your money well requires effort and commitment, but the rewards of financial stability and peace of mind are well worth it. Remember to keep setting goals, being proactive, and learning new things. With the right mindset and habits, you can continue on this prosperous path.

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Karuana Mwai is an award-winning freelance journalist based in Nairobi Kenya with a passion for telling business, health, and social justice stories. Find here on LinkedIn.