Guilty of living from paycheck to paycheck? Well, most of us are, but a few of us eventually grow wiser with respect to finances and learn to manage money better. Money management is no rocket science. It all boils down to this: A penny saved a day will go a long way in building a promising financial future for yourself and your loved ones. Now, doesn’t that sound good?
If you are ready to take the leap towards financial success (read: more disposable income), just reading this can take you halfway through.
Here are five ways to get you started.
1. Set a Budget
As cliche as it sounds, setting a budget is the first baby step you can take towards better money management. Download a good budget app and consider using it as many times as you would open that social media app. All you must do is diligently enter your daily earnings and expenses without worrying about the math. This way, you will be more aware of your incoming and outgoing cash flow, thus being more frugal when it comes to unnecessary spending.
2. Resist Swiping that Credit Card
Familiar with the vicious cycle of swiping your credit card, struggling to clear off the dues, and drowning in a spiralling debt? Well, this is a clear indicator that you need to be more careful of how you use this instantly gratifying tool. Besides, a poor credit score could cost you higher interests or even lower your chances of getting an urgent loan. So, lean on the credit card only for emergencies and resist the urge to swipe it each time.
3. Be More Familiar with Taxes
In an ideal world, it’s good to know your taxes before you get your first paycheck. However, coming back to reality, taking some time out to understand how the tricky world of income tax works, helps. After all, you can then plan your taxes better and ensure you’ve enough in your kitty to easily meet all your financial obligations. Plus, avoiding penalties can save you from breaking the bank. Thus, your choices here can help you control your finances better.
4. Rainy Day Fund
We all deal with times when nothing seems to go right. You never know how an emergency fund can come to your rescue during such an hour of crisis. Whether it’s a job loss or a medical exigency, a reserve fund offers you something to fall back on without the need for borrowing money. A good idea would be to invest a part of your monthly income in liquid investment avenues, such as Recurring Deposits and Debt Funds. Doing so will ensure that unplanned urgencies don’t use up your regular savings.
5. Invest as Much as You Can
Do you have surplus money lying idle in your savings account? Imagine the interest you could have earned by simply shifting that same money to an investment avenue. Investing is like earning a little more than you otherwise do, sans the hard work. Now, who wouldn’t want that? If you are looking for low-risk options, you can opt for Fixed Deposits or Public Provident Funds. If you’ve got a higher risk appetite, you can expect lucrative returns from Mutual Funds or Direct Equities.
If you are ready to take control of your finances, you can start by paying attention to your financial habits. After all the more clearly you reflect on your finances, the easier it is to manage your money.