9 Key Areas of Personal Financial Management

by MSE Staff | Published 22 Feb 2022 

We all want to get the best results when it comes to managing our finances. Two measurable areas that we can look to include our financial capability and our confidence in those capabilities. In this blog post, we’ll cover 9 areas of personal financial management so that you can decide where you stand. By the end, you’ll have a better awareness of personal financial management and key areas to boost your skills.

#1 Mindset

Financial psychology is about how you behave around your money. It covers topics such as where you learn about money, wants versus needs, how you form relationships and develop new relationship with money, your willingness to change, and connecting your life goals to your money to name a few. Take a personal inventory. If you have not reviewed this information in more than a year, it’s a good idea to take a refresher course.

#2 Savings & Budgeting

At Money Smart Education we use the Money Smart Allocation System in place of savings & budgeting. While the Money Smart Allocation System goes far beyond savings & budgeting, the core of it is similar. This area covers your ability to manage your monthly cash flow and save for your short-term and long-term goals. A good rule of thumb is that you should have at least six months of living expenses set aside and be capable of managing your income and expenses as things change. If you are unable to make headway here it’s good to go a step beyond learning and meet with a personal finance coach or wealth mentor so that you can have stability in your finances.

#3 Account Management

Managing your banking accounts and automating payments is complimentary to managing your monthly cash flow. This area goes beyond account management covering research and evaluation of different banks so that you can choose one that best suits your needs. If you are not familiar with this area, taking a class can help you make choices that better align with your goals.

#4 Loans & Debt

Analyzing and evaluating loans as well as understanding the short and long-term consequences associated with debt are core components of personal financial management. Many times, it is undesirable results from an inability to save, unhealthy behaviors around money, inability to increase income, and inadequate insurance that contribute to excess debt. While this area covers how to make a plan to pay down debt, it is important to address the areas that lead to taking on debt. For challenges like this, it is good to consult a personal finance coach or wealth mentor to avoid past mistakes.

#5 Credit Profile

Understanding how to build a good credit history, review your credit reports, and increase your FICO and Vantage scores are some of the most popular topics in personal financial management. The rules around credit change over time so it is important to review annually.

#6 Income & Career Planning

Income is important if you plan to live comfortably. While many financial education courses focus on reinforcing multiple sources of income to support financial stability, it is important to go beyond career planning. Are you able to balance the value of a compensation package along with your pay? If you are a little rusty on this topic, taking a class is a good option.

#7 Insurance

Understanding the several types of insurance available and how they impact your life is an important part of personal financial management. If you have not covered this topic in depth, it is a good idea to take a class.

#8 Taxes

Being able to accurately determine how much of your income is going to taxes will help you plan your finances. If you are not sure how to do this, taking a class will help.

#9 Investing

There is a lot that goes in the topic of investing. Understanding how to analyze and evaluate individual retirement accounts as well as make sound investment decisions are both important factors. If you find that your investments are underperforming, taking classes, and communicating with a team of financial advisors, coaches, and mentors can help you improve.

Final Thoughts

So, there you have it. Problems in areas like insurance, income, Money Smart Allocation System, and mindset can lead to bigger problems with loans and debt. Credit, taxes, investing, and account management were also covered. If you have not addressed these areas of personal finance in a formal education setting, make this year an opportunity to build your personal financial management skills!