Money management is crucial in helping you tackle uncertainties. Becoming financially disciplined is a gradual process that requires efficient planning.
As the saying goes, the sooner you learn how to manage money, the better you become at handling finances and building wealth. Having a solid grip on your finances is the best way to address your day-to-day expenses effectively, take advantage of new opportunities and handle unexpected emergencies.
So, if you are looking to enjoy your finances better, here is an overview of money management and some tips on managing your finances in a better way.
Personal financial management simply means managing your resources strategically. This supports in helping you tackle your daily expenses effectively, achieving significant goals, saving for your retirement and much more.
Here are the main components of financial management:
Here are some strategies that can help manage your personal finances better:
The first step towards financial planning is to determine your goals. It is essential to understand your personal finance goals and be clear about them. List out your major expenditures such as house purchase, wedding, children’s education, etc. and prioritise these goals.
Follow the golden financial tip of not letting your expenses exceed the total income you receive and make sure to track your spends as well. Then, make a list of what you are saving for and prioritise accordingly.
If you have already started saving, map your progress and start investing to build your wealth efficiently. If you face a sudden dip, analyse the reasons and learn to combat them. While this doesn’t mean that you re-establish your financial goals, you may have to get better at budgeting.
Always plan specific, measurable, realistic and time-bound goals so that it becomes easy to achieve them.
It is important to work towards building retirement funds in advance. For specific retirement goals, you may have to increase your savings and investment and let the interest generate more earnings for you.
However, certain factors can restrict your ability to save or accumulate enough retirement funds. For instance, the total amount you can save depends on the age at which you begin making contributions and the type of retirement account you have.
Setting aside even a tiny sum regularly can help build a substantial amount gradually, which is a cushion in emergencies, such as job losses, medical emergencies and many more.
Being overly dependent on credit can harm your financial wellness. Using credit cards judiciously should be the goal in your journey towards financial growth. This is because it can be easy to lose track of the money you spend while swiping the card.
Follow the magical 30-day rule that asks you to wait a month before spending on luxurious items. To clear your dues with ease, follow these four pointers:
To come up with the best route to clearing your dues, consider the opportunity cost. If there are ways to reduce your interest outgo with debt consolidation instruments, you should consider them.
Tax planning is an important advice in terms of money management that you should follow to secure sound financial health. Not only does it minimise tax liabilities, but it can also help you plan your investments in a better way. Gathering tax receipts, determining reductions and income proof as well as opting for tax consultation to avoid the last-minute hustle helps you get quick refunds.
This also gives you ample time to discuss any discrepancies with the authorities before it becomes too late. You can optimise your tax efficiency by making the most of allowable deductions for contributions to retirement savings before the financial year ends.
‘Not keeping all your eggs in a single basket’, is a crucial piece of financial advice that can help manage your personal finances better. A number of investment instruments, such as equity markets, mutual funds, fixed deposits, annuities, real estate, etc. are flooding the market.
You can invest your corpus in an investment avenue that best aligns with your financial goals. However, consistency plays a key role in this. Being consistent and careful with your investments can help you accumulate wealth easily. Remember, this is one of the most important tips for managing money.
However, remember that as you near retirement, the weight of equity investments can change. It is vital to have thorough knowledge before investing in market-linked plans. Choose the best investment option to grow your funds securely and reliably.
Sound financial advice from experts and wealth planners may lead you to pick options such as health and term insurance. Comprehensive coverage not only protects you against unexpected risks but also covers your medical treatment costs.
While you can enjoy tax benefits, the comprehensive coverage safeguards your wealth from a significant dip in times of crisis. This is a strategic approach towards becoming financially disciplined. However, analyse the term and health insurance plans thoroughly to understand their features before investing in a specific plan.
It is important to build an emergency fund to help you sail through challenging financial situations. The easiest way is to create realistic short-term saving goals and contribute on a monthly basis.
Ideally, you should divert these funds into a separate account. As you slowly progress, these emergency funds can come in handy to help you achieve your financial goals.
You can get financial advice from many sources, and it helps to consider all options while also seeking expert guidance. Assess what’s best for you and allocate money in a way that allows you to enjoy value.
Unexpected financial obligations can knock on your doors anytime, even if you manage your personal finances effectively. In such cases, consider getting an Instant Personal Loan from Fibe and handle expenses hassle-free! Download the Instant Loan App here to get the funds, or apply via the website.
The 50/30/20 budget rule is a great strategy for effective money management. According to this rule, here’s how you need to allocate your funds:
Here are some tips for managing money better:
To manage your money wisely, follow these strategies:
