9 Effective Ways To Manage Money – Money Management
Management is controlling and organizing resources in a systematic manner. Money management is the process of tracking expenses, budgeting, saving, investing, and banking the capital, funds, income, or cash. In simple words, managing money is to keep an eye on the inflows and outflows of the funds and make decisions to organize them in an effective manner.
For example, Mukku is a doctor earning a particular salary. After a deep analysis of her expenses, she makes the monthly budget and starts spending. She then remained with a particular amount as a saving. Now, the question arises that what she will be going to do with that remaining amount of capital. Most of us get stuck at this point. The other question arises that is this really important.
Money management is important because it tells us about what to do with the excess capital reserves we have. By learning to manage money, we can become more money aware and will get to learn more skills and techniques to make more money which makes us effective personal finance planners.
Learning to manage money can help an individual in increasing cash inflow, although it is not guaranteed because it depends upon the way of how an individual does investments. But managing money wisely can really help you to increase the standard of your living. Also, effective money management can reduce financial risk which makes you more financially stable and independent.
Now, I think you will be more curious to know some of the ways and tips to manage money after knowing about money management and its importance.
01. Set the right financial goals
Setting up the right financial goal like make it clear that how you’ll going to spend the money or where to spend your earnings. You need to be wiser in making decisions for your financial goals.
The financial goals you’ll make will help you to stay focused on your milestones.
02. Try to cut the expenses
Take a complete insight into your spending. Do not spend much on luxury and lavishness. Make a list of expenditures and try to cut the items or services which you survive easily.
For example, do not buy extra junk food to give yourself a treat just for the matter of taste. Only, this habit can save you from spending extra rupees or bucks.
03. Clear and pay off debts
Debts are a burden on shoulders. They are the responsibilities that create stress. Don’t borrow money that causes you difficulty in paying it back. Moreover, try to be in a situation where you need not borrow money or take loans.
04. Make a good credit score and use the credit cards wisely
In the case of borrowing money from financial authorities, it is better to maintain a good credit score. Use your credit card for your regular budgeted expenditures to create a good credit score but don’t take it for granted. Limit your credit card use. Make a benchmark of your spending and remember not to put on debts.
Create a monthly and yearly budget to keep track of your income. Keep on revising your budget but don’t change it often. A budget can really help you in tracking and managing money. Remember, sticking to the budget is as difficult as following the timetable. So, make a mature move and stick to your budget as much as you can.
06. Keep emergency funds ready
Budget fails when you are surrounded by unplanned scenarios. There could be any moderate or extreme situation to tackle like accidents, random hospital visits, joblessness or may be current COVID scenario. So, to cope up with such emergencies, there should be an extra savings accumulated in order to bypass the extreme and unpleasant events.
07. Save for retirement
It seems very unnecessary stuff right now but it is as important as other things presently. There are certain retirement plans that you can opt for. If you are in India then there is a scheme called ‘Atal Pension Yojana.’ I personally recommend this and if you are from a country other than India then you can check for the schemes and plans that are suitable and functional in your country.
08. Investing and Lending
When you save a lot and want to make money from money then you can invest it in the market or in some business or startup or you can lend it to who is in need.
Check the best investment options that are most suitable for you. There are many options like trading in stock markets, mutual funds, and investments in fixed deposits (FD).
Although banking is the best option here you are restricted with the returns. Also, if you are planning for long-term investment rather than short-term then the above options seem to be less or almost no risk.
Apart from investment, the best option comes out to be lending money. You can lend money to certain authorized interests and also you can become an investor for the startups.
09. Power of bargaining and awareness
It’s not just a random tip but it works effectively many times. The only thing you keep in mind while doing bargaining is not to bargain with the person who you think is poor or not a privileged seller.
Bargaining can be a good practice in well-known markets where sellers marked the price higher than it is and then put on some discounts to convince you.
For this, you need to be aware of the rates and prices of the products and services that you will be going to buy. Awareness plays an important role. It can really help you in bargaining and also gives you confidence instead of being in a case where you put on some random hits.
These are the 9 tips and ways with which you can manage your money effectively in order to save more money and make money from money. Do follow these tips to become a personal financial planner of your house. Be more aware and remain connected to us for more blogs like this. Also, check out our posts about 30 finance bloggers that you should follow to learn personal finance.
Written By- Sagar Rajput