MONEY MANAGEMENT PRINCIPLES

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In this article, we will talk about the importance of managing your money so that you can invest it in a better way so you can increase your capital.

Fundamental principles for good financial management

Now, I will show you the main features that will help you have a good financial management increase your capital in a safe way.

  • Principle #1: You must establish a budget that helps you carry out your projects, you can also measure your financial performance, that means, you must set a financial goal, discover the mistakes you are making in your personal expenses and make noticeable changes in your life.
  • Principle #2: The financial goal that you set for yourself must be realistic,  it must adapts to the initial budget that you handle, it must be reasonable, and it must be a goal that you believe you can achieve over time.
  • Your budget must be based on a detailed analysis that can include the following characteristics that I will show you below.
  • Be clear about the purpose of your financial goal and the plan you will implement to reach your goal.
  • You must make an evaluation of the true financial needs, you must stop spending your money on things that do not bring any benefit to your life, that means, you must stop spending on things that are not necessary.
  • Principle #4: Your financial results should be compared with the budget you want to reach so that you can more easily discover the mistakes you make when spending your money, measure the financial performance you handle daily so your transactions can be supported.
  • Principle #5: For you notice changes in your capital, you must act on the situation, because if you do nothing to help you reach your goal, you will not achieve it, because if you do not start, no one will.
  • Principle #6: The units that you want to use must be within the budget that you are allowed to spend, but if these expenses exceed your initial budget, you must change your plan to one that focuses more on the initial budget.
  • Principle #7: Each of the expenses you make must comply with the relevant regulations, policies, and general rules so that they cannot accuse you of any money laundering or even theft.
  • Principle #8: Each plan you make must go through an evaluation process that will consist of before starting another new strategy to achieve your goal, you must change it or eliminate a current activity that is not necessary within your financial expenses.
  • Principle #9: Each type of strategy must be ensured so that all its benefits are anticipated and much greater than the expenses generated by any other activity that is not in progress.
  • Principle #10: You must constantly remember that the adequate guarantees in case your strategy does not work have to cover the loss that you have just generated and create a plan that will help you to recover all the money that you have lost. Do not forget that losses are normal in all types of projects.

Accountant calculating profit with financial analysis graphs. Notebook, glasses and calculator lying on desk. Accountancy concept. Cropped view.

How to manage your money when trading?

Remember that you must maintain good emotional control, learn when it is time to have yourself so as not to generate an unwanted loss and ruin your hot streak for the day.

  • Spend: One of the tips that Cristian Ap offers is that you do not allow yourself to spend what you cannot lose, which means, if you analyze the market and you can see that it will be a tough day, it is better that you use a demo account to trade and not your real account, so as not to cause any kind of loss. But if you find yourself with the possibility of spending it, do it because it is a strategy that will allow you to reach your capital in an easier way and if you suffer a loss, you can face it.
  • Percentage: Even if you are an expert trader with too much experience, my advice, is that your operations must not exceed 5% of the capital that you are allowed to spend. This will help you not directly affect your emotions, and you may feel angry or sad about a loss that involves too much money in your daily trading.
  • Stop: I recommend that after 2 failed operations you must stop trading with your real account, this will help you control your emotions while you are trading and can help you not lose more money than you have planned.

Conclusion

My experience following these steps and the advice provided by Cristian Ap in all his videos have helped me to increase my real account. Another benefit that I have acquired is getting rid of bad habits that previously prevented me from reaching my goal. Now, I will show you a video that can help you to deepen in a better way how to manage your money and how to make better use of all your capital.