This post was most recently updated on July 19th, 2023
Money management may feel like a strenuous job. And if you feel lost when the topic comes up, don’t worry; you are not the only one. If random financial tips worry you about how you are managing your expenses, keep reading to find out five things about money management.
Knowing how to budget and then sticking to it is vital. Budgeting will give direction to your money; it will empower you to make decisions like your next holiday trip or your retirement plan.
Knowing how to make a monthly budget and then sticking to it is vital. Budgeting will give direction to your money; it will empower you to make decisions like your next holiday trip or your retirement plan.
For a monthly budget, you have to take note of your monthly income. Then you have to address your fixed and variable expenses. Once this is done, you have to learn to allocate funds for your savings.
Hold on to the good things in life, but try to pay off debt as soon as you can. Debts drag your financial stability downward. It is hard to maintain and progress on your financial goals when there are multiple debts hanging around.
Arrange your debts in order of importance and pay them accordingly. If you are facing problems, consult a professional and seek help.
Setting up a financial goal
Life may not always roll as per our plans, but having one is strategically right. Not only does it give you direction, but it also helps you stay motivated. Your goals may be short-term or long-term.
- Short-term goal: A goal that requires your immediate financial attention, like a foreign trip or buying a car
- Long-term goal: Planning for a secured retirement can be categorized as a long-term goal. To achieve this kind of goal, you need to save for a longer tenure.
These goals will give you a tangible objective to start with. You can ask questions like where and how much to save.
A bank account is the ideal and safest investment instrument. And in this age, you can open digital savings account from the comfort of your home.
Kotak811 is offering a digital zero balance savings account where you are not charged a fine for not maintaining a balance in your account. The account is also loaded with add-on features like a complimentary virtual debit card, the ability to apply for a credit card without a credit score, and other banking benefits.
Cutting down on unwanted expenses
Remember how we talked about budgeting and how you should think about your fixed and variable expenses? It is not possible to avoid our fixed expenses. But variable expenses need our close attention. These expenses are what we should work on. An unwanted purchase made just to impress someone or a compulsive shopping list may provide momentary happiness. But in the long run, they are just another dent in your financial plans.
Rather, you should target your short and long-term goals and work towards them.
Work towards your emergency funds
The true nature of life is unpredictable, so having a shield to protect us from trying times is essential. An emergency fund will support you during difficult financial situations. Your emergency fund should have enough balance to cover all your monthly expenses for three to six months. Learn more about how you can save money for emergencies and other unforeseen circumstances in life.