There is a common saying:
“Those who don’t manage their money will always work for those who do.”
Money management is an art in itself, and not many people earning it are aware as to how they can manage it efficiently. People also need to know that it is no rocket science per se and everyone can learn it.
Managing the money requires skills, strength and stability. If you are continuously struggling for keeping the right balance in your family budget, then you certainly need a review. A review not of what you have done but a review of what you should do now.
Of course, you cannot be that much proficient in financial jargons. You can take the help of a financial advisor, but that will not come free. You have to pay for the specialist.
There is no need to do that.
In this blog, we will explain the 5 vital tips one can follow to master the art of money management.
Prepare a Budget:
The foremost thing you should do is chalk out a plan in the form of a budget that contains all the usual expenses which are incurred every month.
This budget will guide your spending decisions and gives you a reality check about where your money is going. You should figure out all your expenses (both fixed and variable) and then prioritize them to include in the budget.
Cut back on expenses which are not important, cancel subscriptions you don’t use. Also, you can create a room for non-budgetary spending which will be financed from the money left after all the necessary spending is done.
Save & Invest:
This is a key aspect which will come handy after your retirement. To become a better money manager, think about the future as well.
As a practice, you should save at least 10-15% of your salary and invest it in interest-earning assets like FD, RD, Mutual Fund, Equity, Fixed Income instruments etc. depending on your risk appetite.
The money you saved also should work for you in fetching returns while you are busy in minting more money. Always remember, the more your money works for you, the less you have to work for money.
It is better to spend the money you saved and invest in the right sector.
Create an Emergency Fund:
No matter how much planning you do, there will be some emergencies, which will appear unexpectedly. Thus, as a smart money manager, you should prefer to have some savings in cash or liquid investments.
This fund will help you if you lose your job if anyone in your family has a medical emergency or any such unforeseen circumstances. Prefer having this money in a different savings account so that you use it only in an emergency.
Alternatively, you can opt for the external funding sources like the borrowing options easily available in the marketplace. For instance, there are some lenders in the UK, providing guaranteed payday loans and these options are available for bad credit people too.
There are multiple loans available at lucrative interest rates, which you will get even if your credit score is abysmally low. However, as a measure of financial prudence, you should avoid taking debt as much as you can.
If you are planning to take these loans from the easy online source, then prepare a repayment schedule in advance and factor in other costs associated with it.
Whether through loans or your broader efforts, you should take out necessary steps to avoid any debts to occur.
Think of a Second Source of Income:
If you have a job that is not too hectic and you can manage some free time, then you can look for additional income sources.
- Become a freelancer in the field of your interest
- Start tuition classes
- Buy a shop and rent it
There are many such income-generating opportunities at your disposal in this internet era. Try to leverage them so that you do not have to miss things you have been yearning to buy. Besides, you will not have to take extra funding sources if you have additional income.
In the Nutshell
All these tips go with a caveat that you will find it difficult to master this art initially. However, once you start it in the right way, half the battle that you have won.
Eventually, it is all about planning and discipline. If you are sincere on these elements, then you can balance your life. Contentment is what you need in the financial stage. Better handling of the earned money gives you immense pleasure and your family to feels satisfied with every aspect.
You will learn many new techniques and principles of money management in the latter stages.
Money management is not an easy cakewalk, and not everyone is proficient in it. Read this blog to get the right plans while you are preparing for it.