It’s always better to give time to your money management skills as this can really pay off well. It can help you stay on top of your finances and can lead to saving thousands each year.
As a beginner, to understand money management better you can use your money in the following categories –
- Making Money
- Saving Money
- Investing Money
Money-saving, when practiced regularly, can help you to pay off your debts(if any), You can use it towards money-making which can yield you more money or you can also invest it in profitable portfolios, this will give up huge returns in future making your future secure.
How to save money?
- Create a comprehensive budget – An ideal budget is the one that includes all your expenses and includes a plan to save a fixed amount towards emergency funds. Remember your budget should be based on your needs, not on your wants and luxuries. You should also write down how much money you receive from your salary, bonuses, benefits reimbursements and other sources and draw a comparison for the savings each month.
- Try to trim your day-to-day costs – Identify areas to save, such as on your phone bills, travel expenses, outings and shopping. It might seem unusual to you in the first look, but trust me you can make a remarkable difference.
- Try to reduce your outflow towards loans & borrowings
- Your priority should be to pay off your higher-interest loans first
- You can opt for balance transfer and prepayment options to end your loans soon.
- Be timely with your payments as this reduces the risk of late payment and penalties.
- If you have multiple loans consolidate your debts into one loan by opting for a debt consolidation loan.
How to make money?
Don’t be dependent just on your salary!
It sounds weird, but it’s true! Your salary is always limited and its a bit difficult to achieve all your financial goals through it.
Have a second source of Income!
The second source of income can add a lot to your savings account. Or after a certain time when your second income is paying you well, you can take it to the next level and convert it to your main income source.
The options for the second source of income can be:
- Starting a freelancing job.
- Having your own YouTube channel
- Starting a shop ( you can hire a staff to run it)
- Pursuing your hobbies such as painting and crafts can also get you money if you are really good at it.
- Being a tuition teacher or a career counsellor if you think you have the correct knowledge.
Get out of debt!
When you are in debt, a certain part of your income goes towards paying EMIs and loans. So, if you clear your debts fast, the money which used to go towards debts can be saved and utilized in a better way.
Close your higher interest loans first as these can draw a major part of your income. If using a credit card, pay its bill monthly and avoid late payments. Try to avail benefits such as rewards, cashback and other offers.
How to Invest Money?
Make Your Savings Accounts Work for You
Well, money can’t grow when kept in your pocket or in your locker.
If you really want your money to grow you need to do some research and then place them in the right place.
Opting for a savings account which yields you more interest is one of the basic ways to save your money which also gives you some profit.
Invest in following
- Real Estate
- Mutual funds
Invest for your retirement
- Put more money for our pension. It’s a great way to make sure you’ll be able to live more comfortably later in life.
- Make investments plan based on your goals and timeframes
- Allocate at least 20% of Your Income Towards investment Priorities to get better results.
- Open a PPF account in a bank and try to contribute monthly towards it as it yields a good interest which varies from 7 to 8% and can be a good source of money for your retirement.
- You can also opt for post office schemes such as PLI and others to get more profit.
It’s always tempting to bury your head in the sand and ignore your bank statements. But analyzing your bank statement can help you a lot to manage your finances. Try to follow the above-mentioned tips and get your money in the right place.