Financial management is something that everyone must do, but not everyone does it effectively. You have to manage your finances to be able to pay your expenses as well as make and meet financial goals for the future. When it comes to financial management, people generally fall into one of two financial management styles, with slight overlapping in certain situations. The type of financial management style you adopt will depend largely on your personal preferences, but if you find that your style is not working in a particular situation, it could be beneficial to adopt elements of the other style.
Micromanaging Your Finances
People that like to micromanage their finances attend to every little detail of their finances personally. They keep track of every penny that is going into and out of their bank account and regularly check their accounts to determine their balances and review their transactions for mistakes. People that tend to micromanage their finances spend a significant amount of time on their financial tasks each month, but generally have the tasks broken down into daily and weekly actions so they are not spending a long stretch of time on the tasks. The people that choose to micromanage their finances often find it soothing because it reassures them that they are on the right track with their finances.
Automating Your Finances
The people that automate their finances want to get their financial tasks done with the least amount of effort so that they can focus on other things. They may not like to do financial tasks or may not feel comfortable with their level of expertise in handling financial tasks, so they let software programs do it for them. Online banking has made it very easy for people to automate various financial tasks, including paying bills and making deposits into savings accounts. After taking the time to set up the automatic transactions, the person will need to check their accounts several times a month for a few minutes to make sure that everything is still progressing according to plan.
A Little Bit Of Both
Most people adopt a little bit of both financial management styles to manage their finances effectively. In my case, I micromanage my spending and my checking account while automating my savings and retirement accounts. Automating my savings ensures that the transactions get done in a timely manner and I eliminate the chances that I will spend the money on other things just because it is in my checking account. I also like to know where I stand on spending money available in my checking account because every so often I like to surprise my son with something special for doing everything that I ask of him and the best chances are often unexpected. There is no right or wrong answer as to which method you choose, as long as it helps you keep your finances in check.