“Money management is a broad term that encompasses the activities of budgeting, conserving, investing, spending, and otherwise supervising an individual’s or group’s capital consumption.”
Pretty heavy definition, right? But take a deep breath and relax because money management is not as difficult as you thought it. You don’t need to be a math geek or a finance degree holder for effective money management.
But, whether this internet buzz worth the hype or not? To my opinion, it is worth more than the buildup because it will reduce your chances to:
– End up in debt
– Tangle in surprising costs
and will grow your chances to:
– Have a decent credit rating
– Be accepted for a mortgage
– Save wisely
– And to reach your saving goals like saving for a car, house, holiday, etc.
The first step to start with money management is having a budget and to set up a budget you need to know your current expenditures on:
– Living costs
– Insurance, bank charges, interest, etc.
– Household bills
– Gifts, events, etc.
– Travel, car costs,
– Gym, holidays, entertainment, etc.
Now, at this step, you will find people to tell you buying a budget planner from a local store or amazon but I will suggest you start with an excel sheet or any paper available at your home. Another option is trying free budgeting apps available by your bank or easily on the app store.
After pinning it all down you will be clear about the difference between your expenditures and income. If your income is less than your expenditures then find a way to cut down your expenses. To get yourself comfortable with this process keep an eye on your credit/debit card statements and keep tracking your expenses even the smallest ones. It will eventually make you sensible about the ones you can make a cut to.
The second most important step is keeping your family or dependents involved in budget making. You can sum your income, expenditures and need to agree on a family budget. It is crucial to reach your family as well as individual goals undoubtedly.
These are the basics and are enough for money management. The next are some tips based on general observations.
Revisit your budget
For many of us, domestic expenses account for a sizable portion of our spending. Life is uncertain so attempt to assess your budget and expenditure in case of any unexpected event or at least once in a few months.
You may receive a pay boost, which will save you money or there might be an increase in your home expenditures.
That’s why revisiting your budget is an essential step of effective money management.
Pay Your Debts
Whenever you have some money, pay your debts as the delay will lead you to higher interest rates.
Set a Saving Goal
You definitely reading this article during a financially hard time and suggesting you have a saving goal seems taunting. But it is for the time when you have a steady income source.
Every month set some money aside in your saving account. You can call it an emergency fund and it will support you with unexpected payments. Along with an emergency fund keep saving. Motivate yourself by setting saving goals start with a holiday and move to a car or home savings.
Reading such articles could be impulsive but to win the race of survival you need to be less impulsive. You need to plan ahead and effective money management relies entirely on planning. Set up a budget, revisit this budget, and set saving goals. You will be your financial guru soon. Have a nice day. Keep visiting!