You will agree with the fact that having money brings a sense of security. This is because we need money for our survival, whether it be food, shelter, gadgets, clothes or any other thing. However, it’s true that money can’t buy happiness but it’s also true that money can buy us things which give us happiness.
But, earning money is not enough if you want to enjoy financial freedom and live a secure life. Achieving financial freedom is a state which brings lots of security and mental peace and needs money management skills to be practised. With lacking money management skills, you may always feel like you are one step away from a financial cliff. But, when you are able to manage your finances well, life becomes easier and you have more time to focus on other important things in life. Money management skills are something which our parents have kept on practising which has helped to grow.
Here are some of the old school money management tips, following which will help you to manage your finances well.
Living within the means
This is one of the habits when followed strictly can lead to saving a lot of money. We all earn money in some or the other way and use it for our survival and to meet your requirements and desires. But when you start spending it towards your desires without thinking about your finances can lead to a black hole in your financial life. In such a case, whatever you earn, it will never be enough to meet your desires and on the other hand, you will not be able to contribute much toward investment and future planning.
The simple tricks of bargaining before you buy anything, being strict about bill payments timely to avoid late fines, avoiding eating out, maintaining a monthly budget and having a track record of all your expenses. These are some basic financial management tricks which our parents have always followed and it’s something which we need to inherit from them if we want to exhale in money management skills.
Save as much as you can
No matter how much we earn, if we are not able to save we can never enjoy financial freedom. Our parents diligently kept saving even in small amounts for our future. This not only helped them to give us a better life but also a secure future.
Saving money also helps us to create a substantial amount of wealth over time which can be used later to fulfil the goal of giving the best education to our child and living a relaxed retirement life.
But, in order to achieve this, we need lots of patience. Savings doesn’t happen overnight and most importantly if you want to pile up your savings you will need years. However, many of us lack this skill as they want to create wealth faster. And to do that in a short span many start chasing the best performing funds or constantly checking the share and equity market.
Having Insurance and Investment Both
Having investment grows your money over time whereas having insurance provides you cover. Both of them are equally important to have balanced finances.
Investment: it’s a must to do things in order to create wealth and achieve financial goals. But before you invest there are many things which you need to know:
- what are the investment options which give you maximum returns?
- What are the investment options you can start with the minimum and maximum of funds?
- Which grows your money faster.
- Where your money is more secure.
- Tax saving investment plans.
- The government offered investment options.
Insurance: Having insurance provides you with cover from the financial risks. Certain insurances also provide returns as the maturity benefits along with the cover against the investment made.
Buying life insurance, health insurance, term insurance are some of the common ones which keep you covered from estimated financial risks.
Things to keep in mind before you buy insurance:
- Benefits offered.
- The amount you need to pay as premiums
- Maturity benefits
- Tax exemption whether applicable or not.
Not to redeem your investment until its an emergency
Redemption from your investments is a huge thing, it not only reduces the rise in the value of investments, but some time can lead to a major loss.
This is common when a particular investment stops doing well, we tend to redeem it or postpone further investments. But by doing this we cause much more harm to our investments than doing good.
Many redeem because of market volatility or a fall, while some do it because they need money to fulfil some of the other needs. But, before you think of it, you need to think about the consequences of redemption. Try not to go with this until it’s an emergency and there is no other option than redeeming your investment.
Managing your finances is not that difficult but you do need to get started. You can start it anytime by following your parent’s habits and money management skills. Remember once you allow your finances to get out of control it will be difficult to manage in the future.