Are you struggling to manage money better? If yes, then this article will help you understand how to manage money efficiently in just three simple steps.
Let us ask you a simple question. After receiving your salary, do you keep track of where your money goes? Most of us would say yes, but we know how the situation really is.
Believe it or not, we all have struggled while managing money. It is an essential skill that most of us lack.
Even if we land our dream job with a six-figure salary, it would still be insufficient as we don’t know how to manage money.
So, it’s time to throw some light on managing money better to secure our future. Don’t worry; it’s just a matter of three simple steps.
1. Focus on Saving First
We would like to highlight two different aspects of how people save money.
The first group believes in saving what is left after spending. So, you will have irregular savings every month. You will be left with zero savings if you spend your entire income.
The second group believes in saving first and spending later. In this case, you will allocate a fixed monthly amount towards saving.
If you haven’t joined the second group yet, do it immediately. That’s because if you save a part of your income before spending, you will have a good corpus in time of need, and you won’t have to rely on loans to cushion your bad days. Ideally, it is recommended that you save at least 20% of your income every month. You are always welcome to save more than that.
2. Think Twice Before you Spend
After saving a certain amount from your income, review how you will spend your money.
So, here are a few things you must check before you spend.
- Bifurcate Your Needs and Wants
Needs are the essentials of life we cannot live without, like food, clothes, shelter and other utilities. Wants are the things we desire over our needs. This could be a premium smartphone or a premium watch without which we can lead our lives, but still, we buy things for a luxurious touch.
Here we want you to set a thumb rule that your wants can wait until you have fulfilled your needs.
Before buying anything at a glimpse, ask yourself if you need it or want it. Don’t make impulsive purchases that will prevent you from achieving your goals.
- Track Your Spending
Keep track of where you are spending. You can also record your spending on a budgeting application and calculate your spending every month. This will help you live within your means and achieve your long and short-term goals.
Remember, investing is the need of the hour. Every day inflation is taking a bite from your hard-earned money. You can only save your money from depreciating by investing it in an inflation-adjusted investment option. So, make a portfolio with a mix of safe and risky bets as per your risk-bearing ability and invest a part of your savings to keep yourself safe from inflation.
That’s it for today. We hope this article helps you manage your money better. Don’t forget to help your friends in their money management journey by sharing this article.