Managing money is a part of everyone’s life. Effective managing money in other words means lead a good and financially healthy life. Money management is definitely a skill whether it is in personal or work life. It is essential to spend the initial part of the relationship to understand who is a better person in managing money. There are mainly 3 types of people when it comes to managing money:-
- Some are really good at calculations but tend to forgot deadlines.
- Some are really good at time keeping for payments but do not manage funds well.
- Some are good at managing money and making payments on time.
It is up to each one of us to figure out what type of person we are and accordingly decide on steps to manage money more effectively. If your spouse is good at making payment regular and if you are good at Maths and calculations then be open to take help and share work. This way you will be able to strike a balance between effectively managing money and earning returns. Here are the top 5 perceived myths about personal money management:-
- To Start Investment there should be Good amount of Money: Many individuals these days perceive that investment is possible only if you have saved a good amount of money. This is an incorrect notion. Investment is not a term associated with big money. Even smallest savings can be used for investments to earn decent returns. Some of the options are share, provident funds, bonds, fixed /term deposits etc. Every small bit of your money counts and it has the ability to earn returns. Stocking it to accumulate and then to invest is a mistake. As soon as you learn to save some penny; it is important to learn how to multiply it. Learn about compound interest and time value of money to understand why investing your savings at the right time is essential. Whether you save or invest it is at the end of the day “YOUR MONEY”. You have all rights over it, but be smart to wisely use it for fruitful purposes.
- Start Investments post age 30-35: Another wrongly perceived fact about investment is when to invest. Many think that the initial 5-10 years is to save as much as they can through the little earnings then to start investment. But it is good to be aware that wise people will first keep aside savings from their income and then use the rest for expenses. Every penny that is saved from very first day is invested to earn returns – it could either be the form of investing in term deposits, share, bonds, government funds etc. Age 30 is not the time to start investment; it is the time to see returns on what you have invested till date. The earlier you start; you will be able to retire with decent money. Also when it comes to making decisions on your investments it is good to take suggestions and opinions to get a good analysis but decision should be independent or between married couples.
- Wait until you Earn to start Saving: There are some lucky ones who need not start earning to start investment. A good savings from pocket money can also be used for investment to earn higher returns. Whether it is a pocket money from your grandparents for your birthday or some extra cash spared from your monthly share from parents, you can still think of investing it to earn returns or interest. There are lots of brokers out there online who are willing to accept young investor and great offers and discounts are provided. These petty investments made at young ages will help you to contribute funds towards your dream projects like buying a house, going for international travels, saving for kid’s education, so on and so forth. Don’t worry about the size of the investment.
- Clearing Minimum Payment Due is Sufficient: When credit card bills are piled up and when income is lesser than expenses, people tend to think paying minimum payment due on the bills is sufficient to avoid additional charges. However it is essential to also understand that in such scenarios debts will keep accumulating and the interest on the same will also be high. Try to control expenses and find ways such as instant loans or personal loans to clear off such small debts. The rate of interest on accumulated credit card debts will be 15-20% but on a personal loan or Insta loan, the rate of interest will be much lower. While clearing credit card debts through personal loans but extra vigilant to not start re-using the credit cards to the fullest, this will crash all your earnings and the overall debt will keep increasing day by day.
- Making Payments through Cash is Best: Many who are not completely aware of the benefits of cards thinks using cash for expenses is best. But with such a strategy you will never be able to spend an extra penny than what you earn and all you earn will go towards expenses and there will be less room for savings. Managing credit cards wisely will help you to earn some rewards points which can be used for buying movie tickets, recharging/ paying mobile bills and utility bills. The approach towards credit cards should be that pay off your credit card bills every month and use the benefits to save some penny from your monthly paychecks. You can use debit and credit cards wisely to compensate the interest rates of debits with the reward points and other offers of credit cards and vice versa.
By understanding these wrongly perceived myths about personal money management, you will be able to make judgment on when to do investment, why to invest, how to invest and how much to invest. Be a master for your own funds and explore all opportunities around you to earn maximum returns on your savings through smart investments.