Money management is an art. If you plan your money you can make the best use of money. Planning your finances involves budgeting your money and saving, reducing your debts and making investments for the future.
If you are stressed about managing your finances then you can take one step at a time. Here are some money management tips which can help you to control your money and give you peace of mind.
Managing money through the below ways.
- Know your finances
- Prepare blueprint for money management
- Savings
- Be Diligent
1. Know your finances
Managing your money is more than anything, it is about making your mind towards money. Have an understanding of your finances. Analyze your spending habits. Did you prepare for your unexpected expenses? Are you living from salary to salary? Are you having an understanding of your own finances? It is important to be honest with yourself and know your money weakness. You should have made some mistakes in your past life and you need not repeat those mistakes.
2. Prepare blueprint for money management
Blueprint makes you turn your goals into reality, it is an action plan. You can use the below steps to prepare the blueprint.
Prepare a budget
When you are not sure of how to make a budget then you should go with a 50/30/20 plan. According to this principle an allocation of 50% of income for your needs, 30% towards your wants and 20% for debt payments and savings should be done. This process divides income into these types and if this logic does not work there are other techniques which you can follow. Using technology and budgeting apps is also a good idea to manage your money.
Want to know How to implement the Envelope Budgeting Method?
Tracking your spendings
When you are tracking your expenses you will understand where and how you’re spending money. You will get inspired from not spending money too much on a certain thing. You can analyze your spending so that you can set it along with your goals.
Plan how to save money
When you are tracking your spending you will find out ways you can save money. Change your spending habits, do bargain shopping, try to reduce your spendings, think of long term benefits and go for spending.
By doing these practices money saving will become part of your life. Learn about discounts, coupons, freebies and other ways to save money.
Use one Dedicated account
Having one account dedicated towards expenses payments and making savings is a good idea. You can be prepared for the future and this will help you overcome the challenges of future emergencies.
Prioritize payment of debts
Debt repayment strategy should be your priority because this will eat away your monthly earnings. Thinking of debt free life should be your goal as it will help you from not falling into debt trap. Payoff the debts which have high interest then work on paying off other debts with low interest. Look out for discounts, partial payoff benefits and other benefits for early payoffs.
Check your credit score
Having good financial habits such as checking your credit score will make you understand what is going on with your money management. Having a good credit score will help you to get new loans in the future. Focus on repayment of loans and credit card utilization have a good balance between these two. One payment if missed will have a negative impact on your credit score.
Read more How to improve credit score with the loan?
Future investments
Allocate your savings towards investments and the compound interest will do its magic. Look for long term investments and aim for long term benefits.
3. Savings
Money management will go a long way, save enough and earn enough to pay off your debts. Do not spend in excess so that repayment becomes a burden. Make the best use of savings by investments, savings, paying off debts and repeating the process. It is important that you are not stuck up in the debt payments. Earn, save money, pay your debts, invest for emergencies and repeat.
4. Be Diligent
In Spite of having good goals by not good diligence people will fall off the financial bandwagon. If you are following a budget then stick to it, if you are feeling difficult then do not be discouraged. Solutions will not jump overnight to earn extra income and planning your expenses will help you to stay disciplined.
Takeaway
Managing your finances is not an easy task and learning financial discipline is a long term process. Plan every month and practice the steps given here over a period of time you will become a master. Challenges can be overcomed by having a financial planner and following a financial discipline.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
