For some of us, money management seems scary, complex and complicated. In this way, we tend to keep away from it until something serious happen and we must confront it.
Try not to hold up till your money spirals out of your control. Money management isn’t that troublesome, it simply needs consistency.
Here are 5 golden rules of money management:
1) Spend less than you earn
We all know this is the most basic part of money management. If what you spend is less than what you gain, at that point you’re in the safe zone. Have a go at overspending for a couple of months as a test, and you’ll realize that it is so hard to make it back to dark. It tends to be incredibly painful to locate that extra money to pay for the overspent amount. Thus, ensure you always spend within your means.
2) Pay yourself first
Remember to always pay yourself first when you get paid so you’ll need to change your budget as per the remaining 90% of your salary.
Take about 10% of your monthly salary and deposit this into a different bank account for savings.
Try not to touch this savings except if it’s emergency. Make a short-or long term plan for this savings, for example, deposit for a car, down payment for a house, wedding fund, or retirement fund.
3) Avoid terrible debts
Terrible debts are negligible debts that are high in interest and won’t bring to you any profits, such as credit card debts. I know it’s difficult to overcome the temptation to spend using your credit card but, in the event that you spend future money by swiping your credit or debit cards, it will take you something like double the effort to pay it back, and it will cost much more to clear your balance. Always utilize your credit or debit card wisely.
4) Grow your cash
When you’ve developed some savings, learn to grow the money. Try with some investment products like unit trust. Try not to invest across the board go, and don’t locate everything in one fund. As the popular advice goes, test the water. When you feel comfortable and confident with your speculation methodology, you can top up or broaden your investment. Try not to anticipate your money will grow overnight, yet to allow for several years before you can see the outcome. Always try understanding what you are putting resources into before putting your money in an investment.
5) Protect yourself and your riches
I can’t stress enough the significance of having adequate insurance coverage for the whole aspects of your life. The operative word here is ‘adequate’ – enough but not all that much security. This is even more important if you have a family – spouse, kids, and other dependents. With our current economic and personal financial situation, almost certainly, a single accident or critical sickness can bankrupt us. With great insurance coverage, at any rate it can decrease the family burden amid difficult times.
To be honest, money management isn’t that complex or complicated. It is much more straightforward than dealing with a bankruptcy situation. Learn to be financially literate and handle your finances with well-ordered manner, each one in turn. Over the long run, you will probably see the result.