With our tips and tricks, this article will help you gain the knowledge and resources you need to successfully navigate the complicated world of personal finance.
We’ll discuss the art of budgeting so you can make a spending strategy that fits your values and goals.
Managing your money is more crucial than ever in today’s fast-paced world. Effective money management is the key to financial success, whether trying to pay off Debt, reaching your financial objectives, accumulating an emergency fund, or investing for the future.
The way we manage our money decides our financial capability in the future.
Our goal, discipline and attitude towards money decide whether we reach our financial goal or keep struggling even after earning well for two decades.
Therefore, we must ponder our money management skills and keep learning and optimizing them.
So, in this article, we have curated 10 Wise Money Management Hacks that can improve your overall well-being.
Our priorities shape our lives, and personal finance is no exception.
If we manage our urge for instant gratification, prioritize saving more money, and invest wisely with proper risk management, we will be likely to achieve our financial goals and enjoy the journey.
Our priorities should align with our financial goals and vision of economic achievement.
Each individual’s plan will differ, but it could include achieving financial freedom in 15 years, building a corpus for a son or daughter’s higher education or marriage, or even building a house or retirement fund.
One should have a monthly budget; only then will you be able to track your expenses and know if you are on track or falling short of your goal.
Unplanned expenses can always occur in some months; therefore, the budget should be flexible enough to accommodate them, limit unexpected costs, and allocate funds to manage them.
Measures can be taken by moving extra funds, modifying the budget to accommodate sudden inflation, or even pulling out excess savings due to lower expenses.
A man/woman without a financial budget and goal is like a sailor without a compass.
Emergency funds can make or break your personal finance fort. They need not be built all at once but can be contributed monthly as recurring deposits until the desired amount accumulates.
Later, you may shift to FD or liquid funds. Emergency funds can cover six months to one year of household expenses. They can be used for job loss, COVID-19, or medical emergencies.
It would help you to manage the situation without taking a high-interest personal loan. If your emergency funds deplete due to a problem, they should be built again after attaining financial stability.
Leverage can be a double-edged sword. While it allows one to buy an asset when we need the required funds, it also derails our financial goals if we can repay our Debt.
Therefore, we should exercise this option with great caution and avoid it in the initial part of our career.
One may take a loan after a few years of financial stability.
However, one should strictly avoid purchasing luxury products or something useless to us in the long run.
In fact, to avoid taking Debt for medical emergencies, one should have adequate medical insurance and even term insurance if one has dependents and in case you have taken a house loan.
Aim in a personal finance journey should always aim to earn more, not just save all the money.
Focusing on a career can increase earnings multiple fold through learning new skills, exploring opportunities abroad or a side hustle, blogging, etc.
Although savings ideally should start from the first paycheck, one should invest first in learning and enriching skills, and once earning is enhanced, aggressive savings should be practised month on month.
For investing, one should follow adequate risk management and deploy money in instruments according to their risk appetite.
Ideally, it should be a mix of equity, Debt, gold, and real estate.
The proportion of each would vary according to age, economic condition, personal obligation to family needs, and risk-taking appetite.
Therefore, follow the current financial guru’s advice to invest only some of your money in an equity mutual fund SIP or directly into stocks.
Remember, slow and steady wins the race.
Simple living doesn’t mean living a miser’s life but being straightforward in our thoughts, being clear on our needs and not going for that impulsive shopping frequently and cluttering our homes, resulting in stress.
Simple living and clear thinking keep us on track and help us be happy and achieve our goals.
Ultimately, we should maintain the right attitude toward life and make our wealth creation a smooth and enjoyable journey, not a do-or-die task.
In between, we should relax and enjoy our milestones by treating ourselves and our families, doing good deeds such as donations for the needy, and thanking God for our blessings.
We should remember that our life journey is much more significant, meaningful, and valuable than our financial journey; ideally, both should be clubbed.