We study for years gaining soft as well as hard skills so we can get good jobs in the future that pay well. One skill that is highly underrated by your school as well as college and not taught by them is money management. You can earn lacs per annum with the help of skills that you gained in your studies, but if you don’t manage your hard-earned money well then your earning in lacs is of no use. So, you need to learn the art to money management.
We can’t stress enough how important personal finance management is. Let us learn the importance of it through an example.
A person named ‘X’ earns 20 LPA, while another person ‘Y’ earns 10 LPA. X spends 15 Lacs per annum for his personal as well as rental expenses, while Y spends 4 lacs per annum including all his expenses. If both of them lost their job at the same time, then who do you think will have more money to survive? The obvious answer by looking at the salary is ‘X’ while the spending habits indicate that ‘Y’ though earns half as much as ‘X’ will have more money in his bank account.
Now that you know the importance of management, let us dig deep into the article for 7 top Money management tips.
1. Track your money: The fundamental of money management
Do you get puzzled after seeing the remaining account balance in your bank account after every week or month? Do not worry, you are not the only one, it happens with everyone. We keep on spending small amounts of money every now and then in the month. We do not realize that those small amounts of expenditures compound into huge expenditures each month.
Keeping a note of every small or large transaction is very important. We do not realize that smaller amounts of transactions hurt us the most in the long run as they transform into huge expenses. Remember keeping track of your spending is the first and most important step in the direction of money management.
2. Create a budget: Be a pro at managing money
As you are keeping a track of your spending you will realize where you are spending unnecessarily. Prepare a budget and exclude all unnecessary spending and calculate the expenses that you will need to carry out for the whole month. Though you can allot a little amount of money for a day off or for a party. Keep in mind to limit your party expenses according to your budget and do not exclude the allotted amount
3. Limit your credit card usage
Most people consider credit card limit as free money and so spend it lavishly. We advise you to not be among those people who consider it free money. Instead consider your credit card limit as money borrowed from your friend, whom you will have to return at the end of the month.
A credit card is a very useful thing till the time you use it wisely, as it can increase your credit limit which will help you in the future for taking loans. Any good weapon when not used correctly turns into evil, so keep in mind to use the credit card wisely.
4. Beware of bad advice
Each group has a friend who says to invest in crypto or do intraday trading to earn a lot of money in no time. Beware of such advice, they will only lead you to disaster. Do not invest in anything without gaining proper knowledge.
It is good to invest in the share market, as it can increase your money many folds. But the catch here is that you need to have proper knowledge before starting to invest in the share market as this market can nill your bank account in a very short time if not invested with proper knowledge.
5. Think of Future: Retiring Rich should be target
Life is unpredictable is what experts say and we couldn’t agree more. You or I can never figure out what might happen the next moment. So, save for any type of unprecedented emergencies that you might have to face in the future. Dedicate a percentage of your earnings each month to save for your future.
6. Invest to grow money and retire rich
Our last tip was about saving a percentage of your earnings, but not in your savings bank account. Experts believe that money should never rest in your bank account as it has the superpower to multiply on its own. There are many ways your money will grow on its own like mutual funds, shares, or EPF. As we mentioned above do not go by the word of your friend or anyone else for investing, learn yourself and then invest.
7. Word of an expert for money management
As we have mentioned many times in this article, do not blindly follow investing ideas from your friends or relatives. We know that learning to invest at the beginning can be daunting, so take your time. Another thing that you can do is take expert’s advice.
There are many firms offering investment advice, which may seem costly but will benefit you in the long run. If you find that the fee for financial advisors is high then you can follow quality blogs like the one you are reading currently.
2 thoughts on “Want to retire rich? Best 7 Money Management Tips for you”