Whether you are a student or a professional working in a corporate, there are certain rules to follow while handling your money which would help you survive any financial crisis without breaking a sweat. This post explains you the same.
Have you ever felt short on funds, craving for more just when you needed your hard earned money? Do you find yourself often grappling with debts and bank loans EMIs and worrying about how to pay them? If the answer to both the questions is yes than it is very obvious that you need some finance education in order to better manage your funds. The tips explained below, if implemented in full earnest, will definitely help you save, manage and spend your money better.
Track your expenses
Many of us live in sheer ignorance about our spending habits and their impact on our future. In fact, there are people who do not even have a track of how much they spend each month on food, clothing, housing, or entertainment. No matter what your mode of payment is, whether it is cash, a debit card or credit card, you should have a clear picture of the total expenditures at the month end. It will help you gain a better picture of how you’re spending your income.
Plan your monthly budget
You don’t have to be mathematical wizard to plan your monthly budget. Contrary to the popular belief there is little complicated number-crunching involved in planning the monthly budget. A simple Excel sheet or the planner in your mobile will do a satisfactory job. The purpose behind maintaining a monthly budget is to keep track of your monthly expenses and stop any unnecessary spending. The first step is to list the fixed expenditures such as monthly rent, transportation cost, food, among others, and keep aside money for these. A small part of the total money can then be used for discretionary expenses like shopping, gifting or partying.
Select the right savings account
You must be thinking that all savings account are same, however, this is not the case. With banks becoming more consumer friendly, they have introduced many attractive schemes and benefits with different types of savings accounts. Instead of going for a regular bank deposit, look at products specifically designed for your needs. There are times when banks offer the zero-balance facility and regular freebies. Some no-fee accounts put a limitation on the number of checks you may write in a month and charge high fees if you exceed that limit. There are times when bank will even waive fees if you maintain a higher balance in your account. This is a tempting proposal no doubts, but be sure that the expense of maintaining the account doesn’t exceed the interest paid.
Limit credit card debt
Credit Cards are helpful but they are also the number one reason for piling debt. Credit cards promote a lifestyle where your debt adds up faster than you can pay it off, and you end up living beyond your means. Immediately limit the use of credit cards and pay off all the existing balances – the sooner you do, the less you’ll pay in interest. It’s easy to pile up credit card debt after college when your expenses rise quickly and a promise of a bright future makes you free from the fear of debts. Plastic should be there in your wallet, but it should be used only for emergencies. If you have to swipe, use the debit card. You will be saving a lot of money in the form of interest and late-payment charges that credit card attracts.
Assess you insurance policies
Insurance plays an important part in protecting against financial disasters, but the premiums you pay are one of your top household expenses. You must have good levels of communication with your provider to be sure you only have the required protection – that way; you won’t end up paying too much for coverage.
Become financially literate
Say a big yes to financial literacy. You should learn the various nuances of finance to make informed decisions. Financial literacy doesn’t means that you have to go through the two or three year degree program in finance, neither does it mean that you have to visit the college for the same. Even if you pursue short term online courses, it will benefit you immensely. Not only you can perfectly manage your own home’s finance, but also have a great deal of impact as a freelance finance consultant. Financial literacy is no more an option, it is now a necessity.
Bottom-line
Saving money or managing your home’s budget is not rocket science, yet it requires scientific acumen, numerical aptitude and more than anything else, a common sense which understands the difference between needs and wants. Equipped with knowledge and know-how of money management, you can ensure good financial health of yourself and your family.