Motives and goals in personal finance management

In the last article I wrote about the higher sense of money management as a way to more control over one’s own life, and as a result - to a higher level of happiness.

Today I would like to touch on a more applied aspect of financial management - setting goals, or formulating why you need financial planning.

Properly set goals are extremely important - the motivation system created on their basis will help you more easily get through the stage of habituation to the recording of incomes and expenses, and will also allow you to rationalize and improve the feelings associated with the necessary control of your expenses. Our goal in the end is that financial management is not a painful, unpleasant exercise, but a deliberate action aimed at achieving well-understood goals for you, thus an enjoyable action. I have achieved this, like many other successful people - and there is no reason why you cannot improve your life through financial planning, and even enjoy it.
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Let's look at the main motives that are commonly cited as the reasons for introducing personal finance management systems into your life.

1. "I want to spend less . " It happens that you think about the fact that the money goes to where it is not clear, and you decide: you should spend less. It takes a month, two, and they all go and go. And it seems that nothing concrete is needed, but there is a feeling that you live beyond your means, and you need to be more modest.

This situation is quite complex from a motivational point of view, because you have no direct need to deal with your finances, and there is only a general feeling of the correctness of this approach. This can be compared with the health of a person between the ages of 20 and 30, when immediate actions are not yet needed, but by indirect evidence it becomes clear that life needs to be changed slowly.

The good news is that you are on the right track. I would venture to suggest that the main reason why you do not understand why you need to spend less lies in the fact that you have no connection between financial decisions today and your standard of living after twenty, thirty or forty years. This is absolutely normal. In the future, we will analyze the typical structure of a person’s expenses between the ages of 20 and 80 years, and you can be sure that even small savings made before the onset of unavoidable large expenses will help you to go through difficult life stages more easily, not to get into unprofitable debts at high interest rates and eventually lead a better off life.

2. "It is necessary to repay debts . " For many of us, at a certain stage of life, a situation occurs when taking a fairly large amount of money in debt seems to be a simple and effective way out of a certain situation (by “large enough” I mean an amount exceeding your monthly income). At this moment it seems that there is no problem - I took it and will give it, because I earn it. After a couple of months, you usually realize an amazing and very simple fact: it does not work. Well, that does not work, and that's all. And you earn like, but all the time you need something, all the time somewhere goes away. And these unfortunate people, some thousand rubles, cannot be distinguished. Familiar? If yes, then I will tell you that you are not alone, this is a fairly common situation. It is very difficult to give money, especially if you owe a large amount - it seems to be inconvenient to give it little by little, to give it entirely and quickly - you don’t have enough money, and you don’t have enough money to save up to give it all.

In the modern world with the development of credit cards, this situation has become even more aggravated - after all, the person from whom you borrowed at least sometimes reminds you that money needs to be returned, and the bank - after all, it’s just beneficial that your debt does not decrease, provided that you are a good borrower and regularly pay interest.

Both of these situations are solvable, later I will describe strategies for resolving the debt crisis, and how the personal finance management system should be set up to solve these problems.

3. “I need to save up for ...” Congratulations, you are in an excellent situation, you have a clear goal that you can easily visualize. However, if you are reading this article, most likely you have some kind of problem (and if you don’t have one, then I congratulate you, you can be happy for you!).

Suppose the following may disturb you: First: you cannot start saving. Second: you save money, but this money goes to some other goals (“urgently needed”). Third: you are saving up, but the accumulated amount very slowly brings you closer to the goal.

Here I must honestly warn that the creation of a financial management system is not a silver bullet. If you get thirty thousand rubles, and you want to save up for a new S-class Mercedes, then your goal is likely to be unattainable, and, most likely, detrimental to your budget - even if you manage to save up for the desired purchase, the service of this car will eat all your revenues. Therefore, this dream is destined to remain a dream, at least until you start earning more.

If your goals are more realistic, but you still have problems, then planning and financial discipline will certainly help you. How to make the accumulation process as painless as possible (and preferably fun), I will also try to tell.

The three reasons that I cited above were most often encountered in my practice, therefore, I am quite familiar with both them and how to adapt their own financial management system in order to achieve them.

But I would really like to hear, especially among those who have read this far (thank you very much, oh, a small handful of truly motivated readers!) - but why do you personally need a financial management system? I would be very grateful.