“I will save Rs. 3000 this month for sure. Month-end: Left with Rs. 3”
It’s not just your story. You have a plethora of companions on this boat. Everyone wants to save money and make investments. However, most of us end up with “I will save from the next month”. It is like college exams “I will study from the next semester”, next semester never comes. But next month can come.
|| Anmol Madaan
You don’t need a high-paying job to end up with more money at the month-end. You need to manage the money you are earning.
On that note, let’s talk about what is personal finance.
Understanding personal finance and investing is not taught in school. Our education system doesn’t bother about such topics. But we do!
Personal finance covers managing, saving and investing your money. It includes accomplishing your financial goals, managing your short-term and long-term needs by planning appropriately.
We are all just a few steps away from managing our money and achieving our financial goals. All we need to do is reduce our expenses and put our money in the right place.
It is not difficult to get your finances on track. Here is what you can do to manage your money.
Track your spending patterns
To begin with, managing your money, the first step is to track your spending patterns. Check how much you are spending and on what items. Say no to those items that you don’t need. Next time whenever you are planning to buy something ask yourself: Do I need it?
Along with items, check where else you are spending like expensive dinners, entertainment, expensive gadgets.
The first rule to manage your money: Buy what you need not what your status needs. Stop spending on premium products like expensive phones that you think add-on to your status. It is just an add-on to the list of bills.
Choose the right bank
You cannot manage your finance without the right bank account. Research and choose the bank that offers the best plans. You need to separate your savings and spending account. By doing this you can divide your money according to your long-term andshort term plans.
Create a budget for yourself
Create a realistic budget for yourself. Now you have tracked your expenses and you know which expenses you need to cut. As soon as you receive your salary, decide how much you want to save and how much do you need to pay your bills.
Make sure you are setting a realistic budget. Managing your finance doesn’t mean sacrificing your needs. Spend how much is necessary and cut the rest.
The reason you should create achievable plans is, they should not affect you negatively. Setting an unrealistic budget will leave you unsatisfied and you may get demotivated to save for the next month.
Pay your bills on time
Don’t procrastinate in paying bills. Paying bills on time can provide you with multiple benefits. You can avoid late fees and plan your monthly expenses. Doing this consistently can lift your credit score and improve your interest rates.
Track your daily finances
Drops of water make a mighty ocean. You have to save every day to manage your finance wisely. To save money, you need to know where you are spending. To know where you are standing, check with your budget for at least five minutes a day.
It won’t take long to check your budget every day. You can either make a spreadsheet or use money managing tools to keep an eye on your daily spending. You may or may not take this tip seriously but this is going to add a lot to your money managing process.
Cut your expenses
Once you are aware of your current position, start cutting your expenses. Do not spend on products or services that are not going to add value to your life. Saving is not the only angle of managing money concept, another angle is investing wisely.
Start spending on books or online courses that upgrades your skills. Learn those skills that can help you in making money. Do not limit this concept to saving and investing. Keep investing in courses that improve your learning.
Often, people start spending unnecessarily on these courses. No, you don’t have to do this. Research and analyse whether this course going to add value and then buy it.
Build an emergency fund
Life is unpredictable and preparing for the unexpected is the best way to manage your finance. Sometimes things don’t turn out the way you expect or something unexpected happens. You cannot reverse those situations but you can manage your finances.
Build an emergency fund and start putting some money every month in the emergency fund. Set up different savings account for an emergency fund. Otherwise, you will not even realise where you spent your emergency fund money.
Make an investment strategy
The best way to build your long-term wealth is by investing. Make a strong investment strategy to make your money work better. The right time to start investing is now. Investing in the long term can yield good returns.
Before you start investing, make sure you have researched well. Try to learn about multiple ways of investing your money. You can invest money in mutual funds, cryptocurrencies, stocks and many more.
Choose the option that poses the lowest risk. This is the most tricky part of managing your money. Choosing an option is not a big deal but knowing when to invest is the real challenge. Research well and once you get the knack, start investing your money.
Keep adding to your knowledge. Keep learning about ways to manage your money most appropriately.
Don’t think, Start Managing your money now!
Managing money is not difficult. Make sure 3 minutes of reading does not go in vain. Start implementing these tips and fulfil your promises (I will save Rs. 3000 this month). Everyone can manage their finances. It is just a matter of time and effort and your wallet will start getting fatter. Who doesn’t love a fatter wallet?
Once you start enjoying the process of saving and investing, there is no going back. So, resist your urge to buy that dress and start saving your money now.
