How to improve money management skills
How to improve money management skills?
In life, are you still single or already married, money management skills are an important part of maintaining financial health.
Both in life and financial trading.
Money management plays an important role in maintaining the quality of life and trading accounts.
In life, everything will be easy if we can manage money as well so that we have good planning for survival.
In forex trading, money management will better maintain trading account conditions and will get more opportunities to make transactions.
Think about when you will spend money, think about whether you really need the item or just you want to buy it.
Especially if you have a fixed income.
You need a monthly budget so you don’t have to be in debt because spending is greater than income.
If you spend a lot of money on spending, these tips might be a way to improve money management skills.
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Ideas to improve money management skills in life
If we are already become parents of children under our guidance, as parents very important we teach good things because most children will imitate their parents.
In many ways, because the child’s primary education is in the family, if both parents often shout, conflict, then this is not good teaching for children’s growth and development.
In money management, we will also be better able to manage it well.
Here are some ideas about how to improve money management skills in life.
Make a budget and stick to it
Making this budget is an idea of how to improve money management skills.
If you have a fixed salary, then you need to make a note of the expenses needed, prioritizing the basic needs first.
Make a expenses budget for one month with your salary, it would be nice if not all money goes to the shopping budget, and leaves as savings.
You have to discipline in obeying your spending budget.
Because if this is only done occasionally, then this does not teach children to learn discipline.
Note that the child will learn from his parents.
If you have a variable income, by making a monthly budget then you will know the biggest expenditure you spend.
And keep stick to your budget, because if you spend all the money, especially not having a fixed income, then next month you might experience problems if your income decreases.
Become a conscious consumer to improve money management skills
If you shop at the supermarket, or anywhere, both online and offline stores, you must be aware of what you want to buy.
Don’t fall asleep while walking, which means you have to focus on your plans to go shopping, will only buy things that you really need, and not just what you want.
Maybe you have an interest in a big discount.
But you don’t need an item that offers a discount, so don’t buy it, you have to realize that it’s not important.
Remember, that every penny we spend money on, it’s very valuable.
You might have to learn from Chinese people that is very detail in their spending calculations, one cent of money left, will ask for a refund.
Adjust income with expenses
Maybe you are an employee of a large company and get a fixed salary.
You should be able to adjust your total spending for a month with the amount of salary you earn.
For example, in a month you get a salary of $ 300, you can create a budget of $ 200 shopping costs.
You can calculate basic needs first, for example for food, electricity, and transportation.
Try not to buy anything less important when the shopping budget has been met.
But if you still have a budget left, you can use that.
Don’t make a spending budget exceeding your total salary, this is not a good way to improve money management skills.
You should have the remaining savings from the salary you get.
Have a plan and vision of the future
Make a future plan to spend your money, meaning you have a vision.
For example, currently, you have children who are still under school age.
You can plan from now on to save as children’s education expenses in the future.
You can save money in a bank, or buy gold as a valuable asset that you can sell at any time.
Or in the next few years, you will buy a new car, at least you make a plan then you will know where your money will go.
As you are going to a certain place, you have to know the route we are going to take, have a map kit, this will make it easier for you to reach your destination faster.
Thinking like an investor to improve money management skills
Maybe you can learn from successful investors like Warren Buffet, he is an investor, he knows how to make $ 100, to $ 200.
It’s time you also think like investors, you can set aside a portion of your savings for investment.
The investment itself has a level of risk level, low risk produces a low return, high risk produces a high return.
Mutual funds are low-risk investments, CFDs and forex trading or crypto trading are high-risk investments.
But you should learn how your investment works, if you want to invest in forex, then convince yourself that you already have the ability to make a profit.
You can learn a trading demo if you want to try trading simulation using the TenkoFX service.
Commitment to saving money to improve money management skills
Doing the work should not be half-measures, you must do it wholeheartedly, not to do the work sometimes do but sometimes not, in doing work must be consistent, this is a commitment.
In applying ways or ideas to improve money management skills, it must be with all your heart.
The ideas above are not an easy way if you do not have the commitment to do it.
Like when you want to burn fat in the body, you have to do exercises consistently to get maximum results.
Collaborate with the spouse for financial purposes
If you are married, you can work with your spouse to achieve financial goals, because most cases in households that cause conflict are about money.
You can sit with your spouse and talk about financial goals, maybe you can find a financial advisor if you like, so you can get other ideas for family financial goals.
If both have a source of income, it is very good and it will be easier to improve money management skills.
If one does not have a source of income, at least by talking about family financial goals will minimize the conflict.
How to improve Money management skills in forex
If you have set aside some money to invest, one way to make double money is by doing forex trading.
If you are new to forex, you should learn about the basics of forex education.
But in practice, forex trading is a high-risk investment, you can lose half or entirely of your money in forex trading.
So the role of money management in the forex is also very important, and we will provide some useful tips as a way to improve money management skills.
As good as any trading system and strategy, without good money management, it will fail eventually.
Know the risks per trade
In forex trading, it’s not just about analyzing the up and down trends, we also need to know how much risk one is prepared to bear in one trading plan.
It would be dangerous if when opening a position you do not know how much risk is ready to bear, while your total capital is not too large.
For example, you have a capital in a trading account of $ 1000, and you will plan the risk of 5%, meaning that the risk to be taken is $ 50.
While your stop-loss is 50 pips, then the ideal position size is 0.1, you can also divide the total position into several positions, for example, 0.01, 10 positions.
Avoid overly aggressive trading
Maybe you want to make double your money as soon as possible by acting aggressively in trading, but this method is not an effective way in forex trading.
Remember that the results obtained in forex trading are not due to the large quantity, but the quality of your trade.
One trading position if you place the order right at the beginning of the trend and exit at the end of the trend, then the profit will be maximal.
Too aggressive by opening many positions without strict risk planning will only make a headache, especially if you do manual trading.
It can also trigger emotions to be more easily smoldered, especially when getting sequential loss.
Waiting for trading signals requires patience, and this requires high discipline.
Set realistic targets to improve money management skills
The character of the forex market often moves dynamically, setting unrealistic targets will often miss the target.
When you still like aggressive trading, maybe you don’t have a realistic target.
Because when your position is misdirected, you just follow your emotions to open a new position.
In the trading plan besides determining the risk must also be with a realistic target if trading daily then takes half of the average daily movement.
If you trade daily and use weekly timeframes to set targets, then this is not realistic.
As a forex trader, you can only approach market analysis, whether using indicators or using chart patterns, all of these methods have imperfections.
The basic principle of success in forex trading is to cut losses immediately when you realize a mistake and let profit run.
In trading you have a plan, if the plan is off track, it means you are wrong, then you must realize it and not let it drag on which can make the loss even greater.
Do not let the newbie bad habits repeat themselves.
Let the floating loss gets bigger because they hope the price will back to the initial track, but when floating profit a few pips immediately cut profit because of fear if the price will reverse direction.
Prepare for the worst conditions
Forex price movements are like a mystery, we don’t know where prices will move after we throw a position on the market.
Because sometimes prices can also occur suddenly moving quickly so that there may be a stop loss that should be liquidated but still the position is still open.
This is because of the rapid movement of prices so that slippage occurs, and bad things can happen.
For example, when SNB intervenes in CHF, it causes prices to move thousands of pips in just an hour or two, and many suffer heavy losses in this condition.
Adhere to the golden rules of high-risk investment, just spent money that affords to lose.
Estimate the exit point before entering a position
In technical analysis, most will pay attention to the zone of support and resistance as a reference for setting targets.
Before entering a new position, you have to estimate where to determine the exit point.
Thus you also need to calculate the magnitude of the risk from the asking price against the stop loss distance.
By calculating this, you will be able to improve your money management skills, where you will adjust the best asking price to your stop loss and exit points.
Faithfully using a stop loss
There may be some traders who dare to trade without stop loss.
But they must also dare to accept the final consequences of their mistakes, stop out accounts.
However, the price movement in the market is sometimes unpredictable.
Then with a stop loss will protect from large losses in these unexpected conditions.
How to place a stop loss is related to a number of risks that are ready to bear in one trading plan.
Maybe you set the stop loss distance of 40 pips, 50 pips and so on.
There are several types of stops, equity stops, volatility stops, chart stops and margin stops.
You can choose according to your experience and understanding.
Keep a balance of emotions and trade
In certain conditions you might experience a bad loss, so you see the balance in your account decreases.
In this condition, you must be able to maintain your emotional balance.
Lest the desire for revenge arises by increasing risk.
This is a bad way because your capital has decreased, if you force by increasing the risk, you will only rely on luck alone.
There is indeed a strategy like that called martingale, but this is not the best way for the long term.
Understand how leverage works
The leverage function is like a double-edged sword, on the one hand, it can provide high profits, but also provides high potential losses as well.
The higher the leverage, the higher the profit potential but also the higher the potential loss.
Now many brokers offer leverage up to 1: 1000, this means that if the contract size of 1 unit is $ 100,000, you don’t have to spend a total of $ 100,000 to trade 1 unit, but enough at $ 100.
It may seem like fun, but this will be a big problem because it will quickly narrow the margin level and finally stop out.
Forex trading is a long term business
Think that forex trading is a long term business, so you have to think about strategies for the long term.
Test strategy not only in a matter of days but see the performance in the long run, even though forex trading is the art of trading because you can do short-term trading.
But you also have to look at performance for the long term, getting the first profit may be easier than maintaining the quality of trading to keep it profitable.
How to improve money management skills in life aside from all the ideas mentioned earlier, you can apply a simple way of life.
Not a luxury lifestyle, think that one day your age will end, life in this world is only waiting for the time of death, luxury living does not guarantee a person’s feelings will be happy.
But living simply, being grateful for the provision, will far bring peace of mind.
While how to improve money management skills in forex, besides the tips above, we also need to have a trading plan, always be calm in trading, not greedy, and run with patience.