How I Made My Financial Life Better by Managing It on My Own

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Money can’t buy happiness, but getting your finances right is damn good. It took some effort, but I found that managing my own money – instead of hiring a professional – made a huge difference in my financial life.

When you build something and take care of something yourself, you better understand how it works. You may appreciate it even more. I think this also applies to your finances. There are several ways that self-study instead of hiring a professional has helped me financially.

Control is everything

Money has a lot to do with thinking. Ask anyone who has gotten out of thousands of dollars in debt and they will tell you: a sense of control is everything . Once you feel like you have some control over your finances, it’s easier for you to come up with a plan that you can take on.

Now that I manage my money, I know the details of my situation, the history of my condition, and what affects my finances. And I feel I am responsible for all of this. This control encourages me to stay on top of my finances and do everything in my power to improve them (and ensures that I always think about the consequences of my decisions).

Here are a couple more of the benefits of being in control.

I know what to expect

Before I started managing my own investments , I relied exclusively on my employer’s 401 (k) manager. That’s okay, except that I had no idea what was going on with my money and had no idea how investing actually worked. So when my 401 (k) statement arrived showing that my balance had dropped, I got scared. I immediately stopped contributing to my pension. I thought, why keep buying something that is losing money? If you know primarily about investing or saving for retirement, you know that I made a stupid decision.

Since I forced myself to find out about my investments, I no longer get frustrated when the market falls. I know enough about this now to avoid the following newbie mistakes:

  • Selling all my long-term investments because I’m afraid prices will drop even more
  • I’m sick because my net worth has gone down a bit
  • Not contributing to my retirement because the changes in the stock market scare me

Since I started practicing, I know that my money is not lost if I don’t sell. And history shows that my investment is likely to pay off over time. Now I know what to do (or what not to do) when the market falls.

There is value in my mistakes

Did I manage my own money well? Of course not. Learning on my own, I made mistakes. For example, to get my feet wet in investing, I once bought a few individual stocks to see how it all worked. Earned, then lost. Fortunately, I ended up breaking even. It could be worse.

But this mistake helped me to understand that investing in index funds on a “set and forget” basis is really the right way (I spent so much time trying to research and calculate individual stocks). He also made me understand how the market works a little better. If I gave my money to a professional, I would never know. (And I would also get less money from paying them.)

You don’t want to be wrong. Avoid them if possible. But when you do something yourself, mistakes are inevitable. However, extracting information from your error can be very helpful.

How I studied on my own

Of course, you can’t become a financial ninja overnight. I had to read a lot to achieve this and learn from my own experiences and mistakes. But the more I learned, the more I organized my financial life.

I got out of debt

I got my first credit card when I was 18. Unbeknownst to my parents, I used it to buy a pair of $ 100 Doc Martens that I definitely couldn’t afford. Then I bought more things. That $ 100 quickly turned into a couple thousand. Before you know it, this is the first time in my life that I am in consumer debt. A few years later, combined with my student loan, it was overwhelming.

A few years earlier, my father had given me Dave Ramsey’s book The Complete Money Erection . He read it and said it was helpful. At that time, I dropped it. When I officially became a debtor, I hacked it.

I found Ramsey’s ideas and concepts about money completely related. My duty was daunting, and his “baby steps” were within reach. Like many people, I had no idea how to start managing my money. But Ramsey is a great introduction to the basics of personal finance. I really liked his Snowball Method . I took small steps to get out of debt by paying my lowest balances first, until I was finally 100% debt free shortly after college. If money is more of a math than a mindset to you, you probably prefer the stack method .

Either way, these methods require you to understand your debt and not lose it. Coming up with a plan to pay off debt, whatever method it may be, is the natural first step in do-it-yourself money management.

I’m a better parrot

As someone obsessed with organization, I’ve always been a fan of budgeting, even as a kid (fun, right?). But this does not mean that I have always made the budget correctly. Again, I had to learn from my mistakes.

For example, when I first started paying off my debts, I did it all wrong . I decided that I was going to live with bare bones and just put every cent of my income into my debt. This was my plan; that was my budget. It didn’t work. If I buy even the smallest luxury – like a pack of chewing gum – it spoils everything. I would overspend my account and my whole plan would be useless.

Problem? I gave myself zero respite. I needed a better budget.

Basic rules like the 80/20 method and the 50/30/20 rule have helped me achieve more. I worked out a budget and then tracked it down with Mint . After learning more about my financial behavior, I adapted other strategies, such as zero-amount budgeting , which I more or less use now. As I understood my habits better, I began to better understand how to manage my money.

When it comes to learning how to save money, Ramsey’s book also helped me realize that I needed an emergency fund. I also found the book Your Money or Your Life very useful. This is helpful if your thinking is getting in the way of your money habits.

I have learned to make more money

When I got my first real job, I was happy with the entry-level salary. In fact, I was happy to just have a job. I never asked for a promotion, but sometimes my team leader did it for me. For this, I was incredibly grateful. But after a few months, I found a similar job that was being paid for in half. I thought it was too good to be true until I got the job and found that the salary really matched the position, even at the entry level. I accepted this job, wrote my application, and my original employer offered me the same job.

At first I was frustrated that they could afford to pay me double the entire time. Then I realized: this is a business . It was my fault that I did not speak up and agree on a salary or a raise. I just didn’t know how to earn more.

But this situation prompted me to get better.

From that moment on, I forced myself to ask for a raise, but still couldn’t negotiate a salary. Several things have changed the situation. For one, this statistic of how you can squander $ 500,000 over the course of your career without saying a word was sobering. In addition, motivated book Barbara Stan ” Secrets of six-figure women” – in particular, its chapter on the character traits of undernourished. Unfortunately, I could touch on almost all of them. Here are a few:

  • Under-earned people tolerate low wages.
  • They are willing to work for free
  • They’re lousy negotiators
  • They believe in the nobility of poverty
  • They are codependent

Her book is clearly intended for women, but I think it is very useful for men too.

Ramit Sethi’s book I Will Teach You To Be Rich has also been a useful and motivating resource for me. His basic money tips like budgeting and paying off credit cards aren’t really new. But when it comes to complex financial topics like salary negotiations, investing, and accumulating wealth, this book really does go a long way. This is a lot of information, it is well organized and motivates you to control your own money.

We’ve told you the best way to start investing on your own . It’s really not that difficult, but there is a lot of information. Our post goes into detail, but overall, my research consisted of exploring the following topics:

Now that I know how set-and-forget investing works, I check and rebalance my portfolio from time to time. And for this I use Personal Capital , which tracks your investments and tells you where to invest your money. It’s kind of like the Mint, but for investment.

When I wanted to consult a professional

Managing your own money is great, but let’s not pretend we don’t need professionals. There are at least two cases when I should have consulted with a specialist about my finances:

  • When I transitioned from full time to freelance work
  • When I started hiring subcontractors as a self-employed freelancer

In both cases, taxes were the biggest problem. It can be very difficult to navigate tax legislation on your own. I figured out what I needed to do when I hired subcontractors, but it took hours after hours of research. Even then, all the information was so confusing that I wasn’t completely sure I really understood how it worked. In the end, I confirmed my information to a friend who was a financial advisor. He told me in five minutes what it took me several days to learn on my own.

It’s also a good idea to talk to a professional when you are experiencing important life milestones, unexpectedly making a lot of money, or facing a unique financial problem that you cannot find the answers to yourself. When you have a lot of questions at once or find yourself in a completely different financial situation, dealing with all of this on your own can be difficult and possibly even risky.

I can definitely understand why someone might decide to use a debt manager or transfer their money to a professional investor. However, the more you learn, the more you will be able to control your financial situation, and this is invaluable even if you still leave some things to the professionals here and there.

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