Investing money is one way to ensure financial security in future. However, it is easier said than done! Investing is a long journey that would require you to better manage your money to ensure you always have a surplus to do investments. At this point, the personal finance skills can pay off. Unfortunately, not all of us possess such skills to manage our finances that ensure financial freedom in future. Which is why we’re here with some money management tips that would make it easier for you to get started in better manage your money for investment perspective.
Let us start!
5 Easiest Way to Manage your Money Better – Money Management Tips
Making more money isn’t everything as long as you’re living on paycheck-to-paycheck. You need to control your savings and expenses to better manage your money – like anything – takes time to understand and work upon.
Below we’ve enlisted some selected tips for effective money management:
Tip #1: Track your Earnings & Spendings
Up until now, you were living paycheck-to-paycheck, consistently overspending, and had no plan to go on with. But, it has to stop! It’s time to play detective with your earnings and spendings. The journey of money management starts with tracking your overall spendings and earnings in a certain period. If it seems overwhelming to do something like this, limit yourself to month’s worth of earnings and spendings.
Pull out the details of your every source of income (irrelevant of, direct or indirect), credit card statements, monthly utility bills, ATM withdrawals, e-transaction records, and details of the upstanding debt, if any.
All these details will help better understand your current position:
- Are you overspending?
- Do you have enough savings for an emergency?
- Do you live paycheck-to-paycheck?
After you compile your expenses and earnings into one spot, you’ll see where your money was going. Beware! It may surprise you how much you were spending out. But, it’s important to create a budget plan – which by the way is our next tip. So, do it anyway!
Tip #2: Create a Budget Plan
It’s time to create a budget plan and set priorities. Take control of in’s and out’s of your money by creating a budget plan to better manage the flow of money. Set up a budget plan which allocates your income for expenses, needs, savings, and debt repayments. While you’re at it, make sure to set priorities like savings, investments, debt repayments, and bills.
We understand it seems like a borking process of listing out expenses to make sure everything lines up. But, you gotta understand that by spending a few hours in a month you can better manage your money giving more room to savings ultimately, investments.
Therefore, stick to the budget plan and update it as you pay bills and spend on other expenses.
Tip #3: Consolidate your Debt
It is said that the modern generation has grown more comfortable having debt whereas the older generation saw the devil in it. Well, whether it is the devil or not, one thing is clear – upstanding debt can come in your way of future savings. As long as you are in debt, you are not free! The next thing to do is to get it under control and get rid of it. If you have upstanding credit card debt, mortgage loan, personal loan or any other sort of loan which is due to pay – make it a priority. Once you fully paid off your debt, only then you can make sure your financial goals don’t get sidelined.
Tip #4: Create an Emergency Fund
It is a matter of time before things go sideways. Any small bump down the road could hurt your entire budget plan. This small bump could be a car breakdown, sudden medical expense, or any other emergency. Hence, it would be recommendable to build an emergency fund side-by-side to ensure that you have liquid funds for 3-6 months separate where it can be accessed whenever you needed in the times of short-term crisis without interrupting your long-term goals.
Tip #5: Invest for Future
A true sign of financial prowess is to invest the saved money to take care of the future. Investing money is very important to manage your money in a way that it can generate you returns that can help you achieve your long-term financial goals. Saving money isn’t enough for effective money management. You need to put aside a sum of money every month from your income to put it in investment. You can decide on the asset-class as per your investment goals, risk appetite, time horizon, etc.
Hope, the above tips will be of any help in your money management process. It is important to make sure that you follow the above tips to better mapping out your money management strategy with your short-& long-term financial goals. Being able to manage your money better make it easier your life, not to mention lower down your stress levels. Remember, effective money management can lead to extra savings that can be invested to achieve something bigger – FINANCIAL FREEDOM!