The following processes and skills are essential for effective money management. When people are ready to make a change in how they manage money, they likely have assessed their current status. Goal-setting Setting or revising goals frequently occurs at the same time as assessment. Influence of values Fit of goals to total financial plan Planning Planning involves deciding on the components, the order, and the course of action. Decisionmaking Decisionmaking goes on all the time, consciously or unconsciously.
People decide how, when, where, and why to spend money.
Implementing Implementing is taking the action steps identified in the plan. Identifying benchmarks along the way helps in monitoring the effectiveness of the plan. Recordkeeping Recordkeeping provides an understanding of how money is managed. It provides information to assess progress toward goals and helps identify the need for adjustments in the plan. It details what a person plans to spend or save, provides a comparison for monitoring the plan, and provides a record of what was actually spent or saved.