How to master my money to build a strong financial future?

You’ll learn here how to understand why you’re wired to spend and save the way you do (or don’t!) – and how to take control and shift your mindset when it comes to money management.

We’ll deep-dive some practical budgeting techniques that’ll help you keep track of your day-to-day spending, explore how you can grow your bank balances over time, and explain the power of compound interest and how it can change your life. 

Ultimately, this guide is designed to equip you with the tools you need to make smart, empowered decisions that will lead you to financial freedom. The basics will set you up for success, and consistency will keep you on track.

Wherever you are in your money journey – wanting to get out of debt, start to save and invest, or plan for the future – this guide is for you. 

Consciously or unconsciously, money has the ability to change the way we think, feel and act. Taking the time to unpack your own feelings about money can help you make more empowered financial decisions.

Are you an impulsive spender? An obsessive saver? Have you switched off notifications from your bank, or do you comb through monthly statements to account for every euro spent? Knowing your what your motivation is when it comes to spending, saving, earning and investing is key to a more balanced relationship with money. 

Experts point to financial therapy as a potential solution for helping people understand the “why” behind their money habits. Digging deep through journaling, therapy or open conversations can reveal potential triggers for over-spending or restrictive saving, from parental or partner influence to other emotional voids. Once these are identified, ways to manage the resulting behaviours can be sought out.

A healthier relationship with money isn’t just a bank-balance-booster – it’ll reduce stress levels, increase your confidence and help you achieve your financial goals.

Now that you have a handle on the “why” behind your money habits and behaviours, it’s time to tackle the “what”. What can you do to start making the most of your money?

Building a budget is a solid step on the path to financial control. It requires you to understand where your money is coming from – and more importantly, where it’s going. 

Start by listing your expenses, from non-negotiables like rent and bills, to the nice-to-have items, like streaming subscriptions, food deliveries and entertainment. Often you’ll discover opportunities to save during this process, as hidden or unnecessary expenses appear.

There are many helpful structures for budgeting. One of the most common suggests splitting your money between needs, wants and savings. Depending on your personal situation and financial goals, the percentages will shift accordingly. 

It might take some time to adjust the amounts and find that sweet spot where you’re servicing debts, saving, and having enough to spend to enjoy life. Remember, budgeting is all about balance and achieving long-term goals – not about making life miserable in the short term.

Once you’ve set up your budget, sticking to it might seem like a challenge. Fortunately, there are plenty of excellent budgeting apps to help keep you on track. Downloaded to your desktop or smartphone, these apps keep everything in one place, reducing the mental load of money management.

Standard interfaces will track your income and expenses, categorise your spending and encourage savings goals. Others take things a step further, generating detailed reports and serving up personalised tips to help you manage your money better.

These apps are a powerful tool for consistent and effective money management, giving you instant insight into your finances with just a few swipes.

During your forensic examination of your personal financial situation, take note of any debts that are incurring high interest. The usual suspects include payday loans or credit cards that require minimum payments, where you become locked into repayments but can’t seem to make a dent in what’s owed.

Prioritising paying down these debts is imperative, as it will save you money in the long run as the interest and repayments reduce. Once you’ve got your debts under control, you can start using your money for things that will benefit you, i.e. saving and investing. 

Tackling high-interest debts can feel a little like climbing Mount Everest, so equip yourself with a tried-and-true strategy. Here are three of the most effective methods:

If you can’t seem to navigate your way out of debt, reach out to a debt relief professional or government service for support. They’ll provide expert advice and a personalised, realistic strategy to help you regain control of your finances.

‘Pay yourself first’ is a sound piece of advice from Warren Buffett, CEO of Berkshire Hathaway and one of the richest people in the world. 

The way this works is instead of waiting until the end of the month to save what’s left over, you set aside a portion of your pay as soon as it hits your account. It’s a good idea to set up a high interest savings account for these funds, so your savings grow even faster.

Shift your mindset and consider saving each month as a non-negotiable, just like rent or an electricity bill. This is a great way to challenge the notion that you don’t earn enough to save.

Consistently prioritising saving over spending each month is a powerful financial habit that will help you achieve your financial goals faster. 

With a little willpower and some forward planning, you can keep your spending on track and live below your means. Continue to stick to your budget, and practice mindful spending. Any time that credit card is burning a hole in your pocket, getting into the habit of asking yourself whether an item is a want or a need is a good way to keep yourself in check. 

Just like budgeting, spending less than you earn shouldn’t be taken to the extreme. You’ve worked hard, so you deserve nice things and to treat yourself – just not all the time. In the long run, you’ll reap the rewards of making smart financial decisions, consistent investing and the peace of mind that comes with having your finances under control.

The less you have to think about your money, the better. Automating your finances means setting up direct debits and transfers so your bills are paid on time. No avoiding, no forgetting. Your credit score will improve, and the mental load that comes with remembering to make repayments or settle bills, and the manual action of logging in and doing so, is eliminated. 

Add contributions to your investment portfolio and retirement account to your list of automated finances. This is another way of paying yourself first, as suggested by the great Mr. Buffett – and supports your long-term financial goals.

By depositing a predetermined amount into these accounts each month, you’ll avoid the trap of trying to time the market. Your wealth will be quietly growing in the background while you focus on the day-to-day.  

Building up an emergency fund is one of the best ways to protect yourself against unexpected events (and related expenses) that can crop up at any time. From bones and cars to windows and computers, things break and need to be repaired or replaced immediately. 

Having an amount of cash available to deal with these issues instantly keeps you from spending even more by incurring high interest from a payday loan or racking up credit card debt.

It’s also a game-changer when it comes to mental health. When you’ve built up a financial buffer, you’re likely to sleep a whole lot better at night because you know that whatever life throws your way, you’re ready for it. 

If you’ve already stashed some cash for those rainy days, consider yourself ahead of the pack. According to 12,400 investors surveyed by Vanguard, emergency savings are the strongest predictor of financial wellbeing. 

Financial experts recommend saving between 3 - 6 months’ worth of essential living expenses for an emergency fund. In his book, “Barefoot Investor: The Only Money Guide You’ll Ever Need”, Australia’s Scott Pape, calls this account the ‘fire extinguisher’ – after all, it’s there for when you need to fight financial fires. Pape makes building the emergency fund a little more achievable by setting an initial savings goal of $2,000, and encourages building on the amount once that target has been reached.

He directs his readers to keep the emergency cash in a high-interest savings account that’s completely separate to their other money (and specifies that concert tickets or flights to tropical destinates do not constitute an emergency). 

Facts are facts: the earlier you start investing, the more time your money has to grow into a nice plump portfolio. And don’t worry – you don’t have to be a market maven or own a crystal ball to make investing work for you. 

Start with small, regular contributions to an index fund and rely on the magic of compound interest. Occasionally lauded as the eighth wonder of the world, compound interest is where your money starts to generate its own money. 

Understanding compound interest is a little easier with an example. Let’s say you invest €100 for 10 years with 5% annual compound interest. After 10 years, your €100 will be worth €162.89, meaning your earned €62.89 without adding any extra money – it just magically compounded. 

Let’s say you decided to invest €100 each month, at the same annual compound interest rate – and you kept at it for 20 years. After 20 years, you’d have a total of €41,300 by contributing just €24,100, and earning a whopping €17,200 in interest. 

That simple example demonstrates the power of compound interest, and shows how easy it is for you and your bank balance to benefit. Many opt for the set-and-forget strategy: set weekly, fortnightly or monthly contributions to your chosen index fund, and forget about it. Let your money work for you in the background, and ignore the inevitable ups and downs of the market. The longer your money stays put, and the more consistent contributions you make over time, the bigger your portfolio balance will grow. Think of it as a way of future-proofing your finances, so you have a nice cushion to land on when you reach retirement.

The content in this article is provided for educational and marketing purposes only. It does not constitute investment advice or financial recommendations. 

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