We all love the exciting feeling of getting our paychecks every month. With our accounts flushed with money, we can buy whatever we need, splurge on things we want, and life seems… comfortable.
But what about the end of the month or after an unforeseen emergency when the accounts start running dry? Such dicey situations can leave even the most intelligent and rich in an unpleasant ditch.
Here we cover 7 basic tips that you can follow to manage your money better.
1. Set up a monthly budget and STICK TO IT
A well planned budget is not exactly a limitation on what you can or can’t spend. In fact, it is the liberty to spend your budgeted money without feeling guilty or worrying about tomorrow.
Setting a budget is a life skill that is underrated by most people in this day and age. Unlike the common notion, budgeting isn’t only for those who are bad with money or spend without putting a second thought to their accounts.
When setting your budget, it is important to keep it in sync with the day you receive your paycheck or the beginning of the month. Yes, it can be a hassle to work out daily expenses and big spends for the month, but the one time effort to plan your budget and small efforts on a regular basis go a long way. And soon you’ll realize it does reap benefits in the end if you successfully stick to your plan.
2. Track your finances monthly
Once you’ve set your budget, it’s important to stick to it. But it’s also important to keep a track of where you are spending your money and to check if it matches with your planning. Unfortunately not many people follow this as they think keeping a track of records can be a tedious task. We are always busy with work to even consider doing this and it falls back in the list of our priorities. However, with all the money management apps easily available to you now, keeping a track of your expenses and savings is easy. It can even help you create a better management system and motivate you to keep your budget in check.
3. Create an emergency fund
The first lesson when managing finance is that you are the only one you should rely on for financial safety. Imagine not having a safety net to fall back on when you are in the middle of an emergency. Building a rainy day fund is one of the most crucial things you need to do if you yearn for financial security. If you haven’t done it already, start by setting aside some part of your monthly income as an emergency fund.
4. Create a savings and growth plan
Anyone you turn to for money management advice will tell you the importance of savings. It is the extra income that you keep for yourself in case you want to make a big purchase or as emergency funds.
However, money doesn’t grow itself; it needs the help of several financial tools. If you have money that you can set aside every month, consider investing in tools like fixed deposits, chit funds, mutual funds, etc.
5. Merge your finances as a family
If you live with your family then common financial logic dictates that you pool your money so that it brings in more resources at hand. In a family, the chief wage earner is the one who brings in the money and manages the expense. But it is unfair to leave the entire responsibility to one person. Moreover, most families today have multiple earners. Therefore, it is essential to merge your finances so that it brings in more stability to the house and after the expenses are deducted, you have a larger pot to put to use.
6. Avoid taking extra credit cards from the banks
One of the most common financial pitfalls is that people take credit cards, not realizing that they are spending money that they’ll have to pay back. Of course the banks are to blame here for the aggressive selling of credit cards. Just because you’re getting a ‘good deal’ on a credit card, doesn’t mean you have to get extra ones.
7. Seek expert advice whenever possible
There is absolutely no shame in asking experts for financial advice. Just as you don’t hesitate to go to the mechanic to repair your car or a doctor for health issues, you should seek the help of a financial expert.
Alan Lakein once said, “Failing to plan is planning to fail”. The quote speaks for itself! Let’s consider these wise words and create an effective money management plan to keep you safe, secure, and happy.