Tips No.1 - Plan a Budget: Planning a Budget is the most important for secure financial freedom. Spending randomly can land you up in financial insecurity at the later stage of life. You can have a better life if you have a proper financial budget at the beginning.
To start planing your budget,firstly, focus on your income and earnings. Say your monthly income is Rs.50, 000/-. List out your monthly expenses. Then Break your expenses into categories like house rent, food, transportation, entertainment, savings etc. See the following table of expenditures to get ideas.
|
Sl. No. |
Item of Expenditures |
Amount |
|
|
1 |
Groceries (for small family) |
= |
3000/- |
|
2 |
Travelling fare (@Rs. 100/- per day) |
= |
3000/- |
|
3 |
Clothing |
= |
4000/- |
|
4 |
House Rent |
= |
10,000/- |
|
5 |
Miscellaneous Expenditures like cigarette, weekend
friends/family meeting, maid wages for (4 weeks @ 4000) |
= |
16,000/-* |
|
6 |
Saving |
= |
10,000/-* |
|
7 |
Insurance |
= |
4000/- |
|
|
TOTAL
EXPENDITURE |
= |
50,000/- |
|
|
* If you
don’t buy clothing items every month and reduce smoking and weekend meetings, you can save more money.
In case you have payment of EMI or debt you can
cut off expenditures on item at Sl.No. 5 & 6. Saving from these can be
used as Emergency Funds. |
||
Tips No.2 – Make a Rule for budgeting: In your budget try to allocate 50% of your income to essentials items or needs, 30% to discretionary spending, and 20% to savings or debt repayment.
Tips No.3 - Set Your Financial Goals: Make your goals as short term
goals and long term goals. Short term goals could be a saving for vacation, building
an emergency fund or paying off annual debt. Long term goals could be saving
for buying house and retirement.
Tips No.4 -Invest while you save : Save your money as much as possible especially when you are young. You can set automatic transfers to your saving accounts for retirement. Create an emergency fund for any unforeseen circumstances. Start investing in stocks, mutual funds etc.
Tips No.5-Organize your debts systematically: If you have debts like credit cards, loan and mortgages, organize your debts systematically. Start from smallest to largest. Try to pay off the high-interest debts first. If you have loans, avoid taking more loans, and clearing the present loan first. Avoid using credit cards unnecessarily.
Tips No.6 - Track Your Spending : Check your bank statements regularly so that you will
understand where your money is going. Like this you can monitor spending habits.
Cut off all unnecessary purchases or subscriptions. For easiest way to trac
your expenses you can install You need a Budget app in your mobile.
Tips
No.7 - Live a life of Low Profile : Try to avoid lavish life and don’t imitate the lifestyle of the time
and inflation. No matter what your income increases your spending should not
increase. Keep the line and allocate your increase or extra income towards
savings or pay first your debts. Don’t go with the spending on luxuries and
fulfill your needs first.
Tips No.8 - Plan for your Retirement – Start your saving for the retirement at the earliest age even if it is a small amount. Open Recurring Deposit in the bank for the next 20 years. Think of your individual retirement account.
Tips
No.9 - Read books and articles on How to manage your money: If you are
wondering how to manage your money, read books related to it. There are many books
that are available online like from Amazon e.g. book like "Rich Dad
Poor Dad"(which you can get in different languages) by Robert Kiyosaki and "The Total Money Makeover" by
Dave Ramsey that can guide your valuable
ideas into managing money effectively.
Tips No.10-Get Insurance: If your budget is not that tight you can get
insurance policy like health, home, and life insurance to protect yourself and your assets.
Follow
the steps above. It is sure that if you have discipline and consistency to
manage your money effectively your financial stress and financial goals will be
better.
---------------------------Disclaimer---------------------------------------------------------------
This is just a sample of financial plans not intended that everyone should do.
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