Smart ways to manage your finances

When I started earning, everyone advised me to save money and build my finances strong. But just like every other twenty something, I never paid any attention to their wise good advise. As I grew older, I realized how much important it is to learn saving and manage your funds.

We all know money is very important aspect of life. Just earning a good salary in not good enough these days. We must know how much to spend and how to save.

Evaluate you income

It is a good practice to evaluate your income before spending it. We all know that our income varies from others. So before copying someone’s style and way of living just analyze your needs with respect to your income. It might not take a lot of time but it is going to save a lot more than we usually think we can save.

Let me give you an example. Your colleague wears really trendy clothes, shoes or owns expensive watch. You might think of buying something like that with your next salary. This is the time you need to step back and just ask yourself. Do I really need it now? Do I have enough already? Does that person has same responsibilities like me? You will realize it is not a necessity and just a desire.

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Make a list

It is very easy for us to get lost and carried away in shiny and glittery shopping market. I never use to write down my requirements and always ended up buying something I would never use.

In these many years I have realized that making a list of our needs and expenses help us understand that what are unnecessary expenses and can be cut down. If we write down each bill we pay for and each item we have been buying every month, it definitely helps to identify what needs to be removed from the list and what should be kept.

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Know your Goals

When we don’t know our goals, it is easy to get distracted. How are we going to reach a destination without deciding before starting our journey?

Same rule applies on managing our finances. We all have some goals to achieve with our earnings. Like buying a home, car, new gadget or upgrading your laptop. It all depends upon our wishes and insight. Like when I joined my job all I could imagine about buying a good laptop, expensive mobile, branded clothes. I did not care much about building my funds. But with time I have learnt to prepare better goals and prioritize them.

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Learn to Invest

Saving money is good idea but investing it is an smarter approach. It has become very easy and there are flexible plans of investment available in every bank. We can choose a simple recurring deposit, fixed deposit or SIP plan and start getting benefits of investments. This way you not just save money but earn benefits from your savings.

I know it has become difficult to know which one is better plan for yourself due to the flood of various schemes. But trust me, it gets easier if you start with baby steps.

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I will share some of my experiences in future, so that you don’t have to learn it hard way.

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