how to manage money

7 Useful Tips for Money Management

October 12, 2022 • 196 views

Everyone talks about making money, but only a few know how to manage it well. Money management is a touchy subject, as most of us are less informed about the best practices to invest and save money for the future. In a world full of uncertainties, it becomes even more pertinent to effectively manage money. Pandemic showed everyone how uncertainties can play havoc with the finances and why effective money management is critical. Numerous individuals found themselves in financial crisis, ended up in debt traps, and even found themselves devoid of any other route to help them recover financially.

In such cases, money management deserves more credit than it usually receives. Your hard-earned money needs to be spent consciously; it must be invested in the right instruments so that it can be used to fulfil your long-term goals. Money management is also essential for long-term financial stability and liquidity. 

7 Money Management Tips to Improve Your Finances

Make a personal budget plan

When under financial stress, many face problems with budgeting. It is hard to allocate funds for necessities, emergencies, and debt repayment. In such an overwhelming state, finances can go haywire, and individuals tend to feel less in control. Creating a personal budget can help you in more than one way. First, it helps in categorizing your expenses, so that you can keep funds aside for each of them. Secondly, it helps in cultivating healthy financial habits to help you make the most of your hard-earned money. 

Keep a track of your spending

While this might sound like the oldest trick in the book, it is surely an important and effective one. Keeping a track of your finances will help you stay within your budget and stop you from overspending. In cases where you overspend, the log will help you determine where the extra money went. You can also use mobile applications to record your budget digitally. 

Put funds aside for emergencies

Putting some savings in a separate emergency fund will help you feel better about your finances while you are dealing with unprecedented events. Events such as house repairs, accidents, injuries, and sudden high-ticket payments can drain your budget if not provisioned for, leaving you in a financial crunch. 

Start saving for retirement

Saving for retirement may sound like a bigger commitment that you can easily postpone. However, if you start now, you will reap the benefits later, possibly in a better way. Starting early not only prepares you for the future but also adds a separate category in your budget planning which remains untouched till the time you use it. 

Also Read: Small Business Money Management Tips: 5 Tips for Success

Plan to repay your debt

If you have borrowed funds from multiple lenders, strategizing your debt repayment will help you manage your money in a better way. There are two methods for debt repayment: snowball and debt avalanche. The snowball method emphasizes paying off your smallest debt first. With the debt avalanche method, you may proceed with your debts with the highest interest rate. When the first one is paid off, the extra funds can be used to pay smaller debts. 

Cultivate good credit habits

Striving to maintain a good credit score also helps you keep your finances in check. If you have multiple credit cards or loans, maintaining a good credit score is essential. Some healthy credit habits include paying the credit card bills on time every month, trying not to reach the limit on your credit cards, and working towards establishing a long credit history. 

Be mindful of your money

Having a more positive mindset towards the money you earn and spend will alleviate money-related stress and anxiety to an extent. Taking a more positive approach while managing money can help you keep a check on your long-term goals, which will eventually compel you to take solution-oriented decisions. In this way, you can focus on expenses that are under your control such as debt repayment and spending habits.

Moving on

You might not be habitual in delaying your purchases till the time you have sufficient funds. However, incorporating these best practices for money management can help you achieve financial stability in the long run. This means you won't have to worry about big ticket expenses anymore, which, in turn, will give your finances a breathing space in cases of financial emergencies. 

The greatest way to achieve financial stability is to get control over your cash outflow, create a plan, and follow it religiously to avoid stressing your budget. If you find yourself in a financial crunch, you can also consider taking a Personal Loan which is flexible with customer friendly features from lenders like Poonawalla Fincorp.

A Personal Loan is an unsecured loan with no end-use restrictions, giving you the freedom to use your funds however you want. Poonawalla Fincorp offers a fully digitized application process. Just apply online, upload the required documents, and await verification and approval, and the funds will be disbursed to your account within minutes. You can also use a Personal Loan EMI calculator to derive your monthly EMIs to manage your budget more effectively and in a stress-free manner. 

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