“Work ennobles. Money facilitates.” (Scrooge Mc Duck)
Each individual has a unique relationship with the management of money, regardless of how much they have.
Some are obsessive about money and spend as little as possible; others spend money like water and have spending habits that are driven by emotion. Some take risks to gain higher earnings, others still claim they understand nothing about money and delegate the task to someone else.

Considering, however, that for many, worrying about money and finance is a key source of stress, it may be interesting to examine which skills and daily behaviours can allow us to have greater control of our money and overall financial situation and so at least reduce this kind of stress.
What is more, this kind of stress is often closely related to work, and can lead to demotivation, anger towards your occupation or the organisation you work for and can even induce people to accept poorly paid work which in turn leads to a loss of self-esteem as well as the inability to cover all costs, etc.
Let me start by saying that:
the art of managing money really can be acquired by everyone.
It has nothing to do with your qualifications or how good you are with numbers or even how much you know about financial markets.
It takes wisdom rather than technical know-how, perseverance rather than complex calculations and
the courage to see things as they really are rather than sophisticated analytical tools.
Especially in times of economic crisis money, or better the lack of money, and the struggle to cover basic living costs, has become an increasingly widespread concern that each of us has experienced first-hand or through family or friends.
In addition, there are fewer and fewer jobs available that guarantee a fixed, stable income while there is a growing army of workers with fluctuating earnings both financially and in terms of the regularity of payments.
This scenario is typical of professionals, young freelancers or start-uppers.
Modern times and similar scenarios make it vital to be competent at managing the money you have, however much or little you have.
Needless to say, there are no magic formulae but the first, real question to ask is: what is the guaranteed, regular income that an individual or family can expect to earn?
This article only touches upon how you can earn more from your profession and focuses on how you can control and manage your money more effectively, even though some of the principles involved in prudent money management, also have an indirect bearing on boosting your earnings through your work.

What often seems to be the case is that
many people who have money problems attempt, more or less intentionally, to remove or get round the problem
often this involves living “from day to day”, thinking that nothing can be done or that it is all a waste of time seeing as, “I have no money, therefore I have nothing to manage”. When things get really bad, people put their hope in a “magic wand” solution, such as winning the lottery or in the more realistic outcome of a loan from family or friends (hoping not to fall in the hands of tricksters who promise quick and easy loans).

Yet even if you don’t have serious money issues, you will find it advantageous to apply a few, basic principles that make money management simpler, ensure you always have a clear picture of your money and finances and enable you to make the best spending and investment choices.
A few warning signs should set your money management alarm bells ringing:
  • at the end of the month, you are surprised to find you have spent more than you thought  or that you have exceeded your credit card or cashpoint card threshold limit;
  • if asked unexpectedly about your earnings or expenditure in the previous year, and how much you were left with, you find you cannot reply;
  • you never manage to put money away for a rainy day;
  • you worry about money constantly until it almost becomes an obsession or, conversely, you never think about money and dismiss any problems completely;
  • unexpected expenses, even for small amounts, cause immediate anxiety.
The art of managing money involves a few tips which can be followed even if you don’t have a degree in economics.
In my opinion, these are the most useful tips:
  1. always pay great attention both to the amount of money you actually have or will have and to the actual moment the money will become available (often there isn’t a real financial problem but one of cash flow, i.e. you have sent out an invoice but are yet to be paid and so the money is not available);
  2. master a few basic concepts such as understanding the difference between gross income (the total sum of all your invoices or your gross yearly salary), earnings (your net earnings after VAT or your net salary), net profit (what you are left with if you deduct all your costs from your earnings), overheads (fixed amounts that have to be paid regardless of how much you earn), variable costs (costs without fixed amounts which may be optional or may vary according to your earnings), capital (used here to mean a person’s overall worth in terms of property, cash, savings, shares, etc.) and financial capital (how much money a person has available in real time);
  3. draw up a monthly and annual budget to understand your cash flow and be prepared to manage your finances (for instance, how much cash you need every month to cover your various costs). A budget is one of the simplest, most important tools and yet it is often unused in personal/family planning, but also in many businesses, especially small/medium sized businesses;
  4. create a regular slot, at least on a weekly basis, to check your finances and see if there are any positive or negative variations between your forecasted and actual situation;
  5. if you are a professional, entrepreneur or freelance, it is always preferable to manage your personal finances separately from your professional/business finances, for instance by drawing up two separate budgets;
  6. even if you have highly variable earnings, it is still a good idea to try to give yourself a fixed monthly “salary” which is not subject to significant fluctuations both in terms of amount and when you “receive” it;
  7. learn to negotiate all money matters (from your salary to your mortgage payments).

To put this advice in practice, start by doing a few simple things:
  • make a list of  all compulsory items of expenditure and specify when each item has to be paid (rent or mortgage payments, car insurance, school fees, VAT and income tax payments, to name but a few);
  • make a list of all your living expenses (from food to petrol), decide which are priorities and calculate rough, minimum amounts based on average amounts in previous years;
  • make a list of all other, non-daily, but presumable and/or desirable expenses (for example, medical expenses, holidays, clothing, etc.).  Here too, try to estimate rough dates, priority levels and average amounts based on previous years;
  • make a list of all expected earnings as well as presumed collection dates (or your net salary if you are an employee, calculating the number of monthly payments due according to your contract plus any variable amounts);
  • set a target in terms of invoices issued during the year (if you are a professional or freelancer) and expected invoicing and collection dates;
  • for invoices issued, define the number of clients/quotes needed with relative issue dates and give yourself a target in terms of submitted quotes vs approved quotes;
  • define a percentage of earnings you aim to save each month or year (the wisest among us set their target at around 20% of earnings).

Once you have created all these basic lists, create a simple Excel spreadsheet using the first column for earnings and expenditure and the other 12 columns for the months of the year.
In the first column, insert a row for every earning you expect and add the date in the column corresponding to the month you anticipate collecting the amount.
If you are registered for VAT, add the net amount, exclusive of VAT.
Add the percentage of savings you set yourself and subtract it from the total value of earnings exclusive of VAT.
Next, add all the expenses you listed to the columns corresponding to the month in which they are due.
Finally, start from the first month and deduct costs from earnings after VAT and planned savings. If the resulting total is a positive value (profit), this means you can add the earnings to the following month, or you can decide to increase your expenditure for that month, and so on.

This kind of table will allow you to forecast if your earning will cover your monthly outlays. If you have no profit one month, you need to decide if you can postpone an item of expenditure to the following month, cancel it, collect any earnings in advance or if you need to find alternative ways of covering the cost (such as a loan).

An Excel spreadsheet such as this is an extremely simple financial planning tool, which will enable you to be more aware of how to manage your money. It will give you a clear picture of your finances, lower stress levels and allow you to plan ahead to avoid financial emergencies which will be trickier to solve.

A few little tricks:
  • put your savings (such as VAT due if you issue invoices) in a separate bank account to the one you use for your daily financial management;
  • always aim not to spend all the money in your account;
  • start saving immediately, even if only small amounts;
  • set and stick to a monthly budget for additional expenses;
  • as mentioned above, if possible, turn variable monthly earnings into a fixed, average monthly income to simplify financial planning;
  • ask for the help of an expert to help you set up your money management system, which can be as simple as an Excel spreadsheet, then continue by yourself.

However you organise yourself, this advice is only the first, fundamental step towards mastering the art of managing money.

The other fundamental step is to guarantee an income that covers your needs or those of your family.

This point needs to be expanded in detail but the first piece of advice is to use part of your earnings to invest in yourself, by boosting your skills, network and personal branding, as well as trying out new projects because this is the best way to ensure new, constantly growing earnings in future.
How good are you at the art of managing your money?
Have you got any tricks to share with us?