NEW YORK (MainStreet)—Developing a potent personal finance acumen can take some work, but it does not have to be a daunting undertaking. It is possible that with a few minor adjustments to your approach, you can be well on your way to developing a tight handle over your own financial matters. Here are some ideas from a few personal finance experts to consider.
Regardless of your level of income, being diligent in monitoring your cash flows is vital. "The key to financial success is to track your spending and to know how it relates to your sources of income," said Neal Frankle, a CFP and founder of Wealth Pilgrim. "You can have the best investments in the world, but if your spending is way out of line with the income those investments generate, plus the income you generate outside of your investments, it is going to eat up all of your capital and it won't matter how well you invest."
Frankle emphasizes the value of staying the course. "Have an investment strategy that you accept as less than perfect and be willing to stick with it," he said. "That doesn't necessarily mean that you have to buy and hold, but every investment method has its days in the sun and has its dog days as well."
Learning new financial strategies can be beneficial, but moderation should also be a consideration. "Sometimes people become overeducated and get paralysis from analysis," Frankle said. "There is nothing wrong with becoming more educated, but there is a danger in it because then people get tempted to try something different all the time."
Luke Landes, founder of Consumerism Commentary, also advises individuals to be attentive towards their spending habits. "Start being more aware," he said. "You want to be aware of what comes in and goes out of your bank account so you know how your money is getting in there and where it is going."
This awareness should extend to the macro environment around you. "You also want to be aware of what's going on in the world and how the decisions you make affect your finances down the road and how the decisions other people make affect what you have to deal with in the world," Landes said.
Forging a strong financial awareness may not be as expensive as you think. "There is so much information available online for free," Landes said. "You have no guarantee that if you take a personal finance class that the information is going to be any better anyway."
Learn From the Mistakes of Others
In order to become more financially savvy, avoid common pitfalls. "Before making your own mistakes, learn from the ones other people have made," said Erica Sandberg, personal finance expert and author of Expecting Money: The Essential Financial Plan For New and Growing Families (Kaplan, 2008).
Online personal finance columns can help bridge knowledge gaps. "Advice columns are perfect vehicles for this," Sandberg said. "Subscribe to a few and read them regularly. You'll soon discover that you aren't alone with 'silly' questions and you'll get answers from the experts."
Sandberg also notes that individuals looking to sharpen their chops should take into account alternative viewpoints. "The biggest problem that I see is that people often resist the truth," she said. "Sometimes myths are more attractive. Keep your mind open -- it can be hard to let go of preconceived notions but they hold you back from getting ahead."
--Written by Billy Fisher for MainStreet