How to start managing your money
Personal finance is all about budgeting, saving and spending your
money wisely. Money management is not something that is taught in school.
It is something you learn on the go. Whether you want to retire early or not,
planning your monthly finances is a quicker path to your financial
independence.
You just
need to follow some basic money values on monthly basis:
Track your
expenses: Track all
your expenses for a month and then make a list of the things you would continue
to spend on. Keep a track on how much you spend on food, rent, clothing and
entertainment every month. Whether you pay by cash, credit card or debit card,
note it down in a notebook.
Plan out a
budget: Building a
budget for your expenses and savings is a great way to monitor your money. Just
because you are making a budget, does not mean that you have to give up on a
lot of things. After a month of following your budget plan, see how you can
alter it to benefit you. Your budget plan may take a few months to start
working out for you. Be honest with yourself, the plan and make changes when
necessary.
Credit
cards: Credit cards
give you a chance to spend on things that are normally not on your budget. Just
because you can pay the money later doesn’t mean you indulge in shopping. What
you’re actually doing is piling up on debt.
Savings
account: Create a
separate savings account and be sure to diligently park a certain percentage of
money from your monthly pay cheque in this account - ideally a 10%. If you get
some extra money, it is best to save that too.
Free money: If your employer offers a
contribution match for your provident fund, you should take advantage of this
opportunity and be sure that you too contribute enough to obtain the maximum
match amount. Maximizing your contributions can lower your taxable income.
Review your
budget: After a
month of following your budget plan, see how you can alter it to benefit you. Your
budget plan may take a few months to start working out for you. Be honest with
yourself, the plan and change it if necessary to make it more convenient.
Legitimate: Sometimes it is tempting to
choose an investment that will pay you more than legitimate finance houses. For
example chit funds can give you more interest on your investment but is it a
legitimate one? Make sure you do some research and study comparisons before
choosing a place to save your money.
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