- Personal Finance
8 Steps to Start Managing your Money: Personal Finance
Financial planning is not a rocket science. I agree there are many courses to understand the technicality of Finance, but that doesn't mean that we as an individual needs to master the subject to live a happy and stress-free life.
The saving for the future part is a tricky part to play in day to day life. It becomes more difficult when we find ourselves surrounded by the interesting and luxurious offers prevailing in the market all around us.
I have understood finance as a subject at the very later stage; however, my mother had always tipped me and my brother with some very easy but annoying steps to save in our childhood. She used to make us save for the gifts that we ask her to buy for us. She used to say she will contribute half of the price of the product if we can show her that we can take care of the money that we receive as our pocket money. Later, I was really surprised to know that my mother’s ideology regarding saving matches the great Warren Buffett, even she has never studied finance as a subject. She still reminds me that if you have money in your hand you are going to spend it. It is better to spend whatever you are left with after you have taken care of your savings.
We all, at some point or the other, begin to understand the importance of money in our life. At an early stage of an individual’s life, the focus is always to enjoy life to its full at any cost. However, as we get introduced to our friend ‘responsibility’ here, we get the clear picture of how our life can turn if we do not manage the one thing that more or less can affect our happiness and peace of mind i.e. MONEY.
There are few lessons that I have learnt till now to manage my own dough, even if I do not earn a fortune but I try to stick to the plan. I will be glad to share them with you.
Steps to Learn to Save for Better or Worse
1. Saving at Source-
First on the list would definitely be by mom’s idea of spending after saving. I still remember when I got my first salary, my mother asked me to open a recurring deposit and let a small part of my salary get deducted at source so that I would not be able to spend it. Initially, I was pissed but the idea worked and I was actually able to save enough to plan for my wedding.
2.Amount does not matter-
Most people often think that what they can achieve just by saving 100 bucks per month. The idea is not the sum that you save but the span you save. Add small drops of saving regularly to turn them into your own ocean of money.
The longer you can keep saving the more you will be surprised when your small contribution will take a shape of a huge bank balance as compared to the initial amount that you had saved. It will be more helpful if you can keep increasing the amount of money that you save on yearly basis. It does wonders.
3.Remember your priorities while spending-
Each individual has his or her own sets of life goals and they need to plan accordingly to achieve them as soon as possible. Whenever you feel the urge to spend the extra money you have, just think about the priorities and your life expectations from yourself and decide for yourself.
The tip is to keep mentioning your goals to yourself. You can put it as your screen saver, or keep a picture of it in your wallet. It will seem cruel but for your own good.
4.Credit VS cash-
Spending plastic money is easier than the real cash as it does not give the feeling of the spending the real money and hence less guilty. Spending cash can give you time to re think your decision to evaluate the requirement of the product.
5.Take a deep breath before closing the deal-
Spontaneous buying is dangerous for your bank balance. Give yourself a moment to think about the necessity and urgency of the expense and then go forward with the transaction.
Don’t compare your living status with your colleagues. Try to live a happy life, not a competitive life where you always feel the need to maintain a status in the society even when you cannot afford it. The pressure to have some luxury comes from the people around us and that can hurt your plan to save. Avoid getting into such weak moments. Calculate your money, prioritize your needs and spend accordingly.
7.Check your extravagance by punishing yourself with saving. Bitter at first but leaves a good taste in the end-
It is bad that you do not pamper yourself after you work hard so much to earn that happiness. I have read this tip somewhere - you can celebrate and save side by side. Example: whenever you plan an outing, just calculate the overall expenditure. Move the same amount to your saving account also.
In this way, you will be spending 100 bucks but also saving 100 bucks as a fine of spending.
It is better to stick to the plan rather than changing it as per your convenience. Prepare your own budget for yourself and manage your fund as per that plan. It helps in long run.
© 2014 Sonal