Anyone can be good with money? That’s right!

Do you finally want to get to grips with your finances, but don’t really think you can, or aren’t sure where to start? Don’t worry, you’re not the only one! After all, we’re not necessarily being taught knowledge about money and finances in school, college or university. Even at home or among our circle of friends, not everyone speaks openly about money – which is why it’s often difficult to get the conversation started.

In this guide we are explaining to you why money management is a skill that we can all learn – and what first steps you need to take:

Why do we all know so little about money and finances?

Money and finances play a role in every aspect of our lives, sometimes directly and sometimes just indirectly. And yet it’s still not a topic that’s taught to us in school or that we talk openly about at home with our families. Which is why there’s absolutely nothing wrong with you if you don’t enjoy addressing anything related to finances. But the good thing is that everyone can learn to be good with money because it’s a skill that you can teach yourself step by step.

Nobody is born into this world being good with money or able to plan their finances. It’s not a character trait, but a skill that you learn over time. Those who are taught about money at school, who have access to resources and who can speak to their parents and pick up smart tips from them will be in a better position in the future. But it’s never too late. We can all learn how to cook when we’re 70, which is why we can learn how to deal with money when we’re 70 too.

Perhaps you’ve seen movies and TV series like The Wolf of Wall Street, The Big Short or Bad Banks. They are all about crises, huge sums of money that is lost, and greedy, sweaty men pacing around the trading floor. Stop at nothing, be unscrupulous, take as many risks as possible – these are the messages conveyed by such movies and shows. Does the way the financial system is depicted make you want to delve deeper, become a part of it or even invest yourself? Probably not.

And that is a problem, of course. Because due to this one-sided representation, people – women especially – are being kept away from financial topics and knowledge. If financial topics were presented on TV in a way that is as exciting and accessible as yoga or cooking tips, you’d probably be a lot more interested in them. Yoga and cooking are things you have to teach yourself too, but due to the way they are portrayed, it’s clear what kind of a positive impact they can have on your life and there are enough instructions out there that can help you to learn both from scratch.

Why is financial education important for us all?

Why is having good financial knowledge so important anyway? “It is clear that billions of people are unprepared to deal with rapid changes in the financial landscape. As European governments face aging populations and smaller public pensions, they are calling on their citizens to take a bigger role in retirement planning,” explains the ‘Financial Literacy Around the World’ study by Standard & Poor’s Ratings Services, 2015.

All our grandparents had to do was put money into a savings account and it would multiply all on its own, thanks to the high interest rates at that time. And of course their pensions were also safe back then. The financial situation we are all facing today is more complex than ever before: inflation, financial crisis, energy crisis and no guarantee of a decent pension. To help you deal with this situation, you need financial knowledge and the confidence in yourself and your know-how to be able to make good financial decisions.

We are living in an economic system where products and services are exchanged for money. So can we use it to buy happiness or freedom? Not happiness itself, of course not, but we can use it to buy a lot of things that make us happy – yoga classes, vacations, dining out at restaurants, trips with friends. And freedom can also mean being able to leave at any time, whether that’s a job that isn’t good for you or a relationship that is no longer working. You can do that once you’ve planned for the future and put aside an emergency fund to help you bridge the gap.

So, as you can see, money is a lot more than just a means of exchange. And the better you become with money, the better you can use it to provide for yourself and make provisions for your old age.

What does ‘financial confidence’ mean?

As most of us find it difficult to deal with money, researchers have already set off in search of the causes and possible solutions.

In a study from 2021, Prof. Tabea Bucher-Koenen from the University of Mannheim, together with other researchers, examined the correlation between financial competence and self-confidence. What were their findings? “Small initial differences in confidence might lead to large differences in accumulated financial literacy and financial wellbeing.”  This study proves that self-confidence and good old-age provisions are related. If you don’t have confidence in your own financial expertise, you probably won’t be able to build up a solid financial cushion.

And precisely these results were also confirmed in another study in which the researchers found out that financial knowledge, or a lack of it, can have far-reaching repercussions: a high level of financial knowledge increases the likelihood of participation in the stock market, has a positive influence on pension-related decisions and wealth accumulation and contributes to a more efficient management of debts. None of which is possible if you don’t have the required financial knowledge.

These two studies show us how much our financial actions are influenced by mental factors and the confidence we have in ourselves. And this confidence is something you can build up yourself by developing your financial knowledge and noticing step by step your progress and how much you are learning along the way – basically, you will develop financial self-confidence.

What role do belief systems and mindset play when it comes to financial knowledge and money?

There is an astonishingly high number of sayings and proverbs related to money. From “Look after the pennies and the pounds will look after themselves” to “Money talks”. Sometimes they are positive, sometimes negative. But a lot more important than generalized sayings are the sentences that you have adapted to you and use yourself when talking about money – and that you believe in. These sentences are like your belief systems that influence the way you are with money, sort of like an inner attitude:

• These belief systems are said to be either a hand brake or a gas pedal and are often developed during childhood, a time when you still require a lot of orientation and guidance. 

• If your parents used to argue about money or an inheritance dispute caused friction in your family, you might have learnt that money is bad for a person’s character. Without realizing it, this will automatically cause you to keep your distance from money and anything related to it.

• If the people around you believe that the stock exchange is bad news, you probably won’t have shown much of an interest in it so far and have likely avoided conversations or information about it too.

• Many women say that they were told in school that girls aren’t very good with numbers – which is something that they still believe as they get older and carries through into the way they see finances and money.

• Belief systems can work like a self-fulfilling prophecy: if you believe that you’re not very good with money, then you won’t try and therefore prove the opposite. That’s why it can have a profound effect when you start addressing these belief systems.

 If this is a topic you’re interested in, you can find out more about money mindset here. 

How do I start getting to grips with my finances?

Once you start addressing your finances, it’s like learning a new language: to begin with, you learn individual words and terms, shortly afterwards you can order a coffee in your new language, and then you will start enjoying talking to others and immersing yourself more and more in the country and culture.

And that’s exactly how it works when you take the first steps to getting a hold over your finances.

The most important step is to have a clear overview of your own financial situation first. Only then should you turn your attention to complex matters like the stock exchange or investments. Give yourself enough time and don’t overload yourself with too much information right at the beginning.

To be able to understand your own financial situation, you need to track it and analyze it. This is where budget books come in very useful, because they show you in black and white how much money you are spending and on what – and how much you can perhaps save. Because while it’s usually relatively easy to say how much money is coming into your account every month, it is harder to clearly work out your spending.

A coffee here, flowers for a friend there, another bus ticket here – it’s easy to lose track. Just one clear answer of how much you actually spend each month can really help you. Especially if you want to plan your future and save or invest money every month.

The good thing is that your income and expenditure are automatically categorized in the Tomorrow app. But you can also draw up a chart to track them yourself. Tip: track your spending over a few months to discover any hidden costs. Some insurance companies, for example, take your payments quarterly instead of monthly.

You will soon notice that having control of your money and keeping track of your incomings and outgoings with a budget book feels really good – here it all comes down to the financial confidence we mentioned earlier. Once you’ve tracked your spending for a few months and know what your monthly costs are, you can compare your expenditure with your earnings – this will allow you to find out how much could be left over each month and what new goals you can set yourself. Click here to discover some useful budgeting methods and find out how you can divide up and plan your income and recognize even more saving potential.

How can I learn more and stay up to date on the topic?

Finances are a life-long subject, which is why you will never be done learning about them. Here are our top tips to make sure you keep your eye on the prize and continually build up your knowledge:

• Speak openly: The crazy thing about money is that we all face the same challenges. We all need to earn money, make decisions about money and invest for our old age. So why don’t we just talk about it? Why aren’t we asking each other questions like: How much do you earn? How do you as a couple split your rent? What are you investing in as part of your retirement planning?

• As soon as we open ourselves up, put our thoughts into words, get advice or even just realize that other people are in the same boat, we will feel better and can also learn from them.

• Let the contents come to you: Whether you follow Tomorrow and other accounts on Instagram or TikTok, have a subscription to a finance magazine or listen to podcasts, it doesn’t really matter – the main thing is that you have regular access to new knowledge and inspiration daily.

• Make it a habit: Even though it might not be much fun to begin with, make fixed finance appointments with yourself – every two weeks on Thursday evenings, for example. Use this time to fill in your budget book, draw up a budget plan or read up on financial matters.

Find out more

Money & Relationship: How to deal with the question of joint finances in relationships

Shaping the future: Your path to financial independence

Sharing is caring: 8 important tips to start investing