How Can One Manage Money Effectively?

Managing money is not sorcery. With the right tips and the right lifestyle, it’s possible to earn money and save money. Of course, you need to avoid mistakes that cause the outflow of money. Maybe not a truckload of money but definitely a decent sum. Both earning and saving come under money management. In this article, we’ll discuss money management at length. If you are curious to know what is the best way to manage money, keep reading.

Earning money

I bet most people are somewhat good at saving money. Yes, they need advice here and there, but overall they know how to save. The problem starts when one gets serious about earning money because it is not easy even for people with the right skill set and contacts.

It’s 2019 and earning money has become a bit more difficult than before as the competition has become immense. At the same time, many new doors of opportunities have opened up that were sealed before. The key to constantly earning money irrespective of what trade you are in is to understand the market and adapt to it. Smartphone sales are at an all time high, time to get a job in the sales department of a Smartphone manufacturer or a dealer. Stock market looks bullish, get your hands dirty with investment tricks.

You need to constantly learn, unlearn and relearn. Also, be open to new ideas and suggestions and acquire new skills to make more money than what you are making now.

Income and expense ratio

The golden rule of maintaining a budget is to create a ratio between income and expenses. To formulate and maintain the ratio, you first need to understand your expenses. It’s not hard if you know how to categorize your expenses. Some expenses like grocery, electricity bill, insurance premiums, etc are absolutely necessary. Other expenses like dining out every once in a while, going to a movie theater, etc are leisure expenses. These expenses are luxury, not necessary.

Why categorizing your expenses helps?

You can decide how much of your income should go meet what expense and create a ratio based on that. People normally spend the largest chunk of their income for grocery bills, stationary goods, electricity and Internet bills. However, you don’t have to follow this rule. If you feel something that is of little value today could yield a high return in the future, don’t hesitate to invest in it.

Simply put, there’s no optimal ratio. It’s all up to you.

Save for retirement

People save for retirement all through their life. It’s like nourishing a tree hoping it will yield fruits after growing up. When money management is thrown into the mix, it maximizes your retirement savings.

How can you do that?

There are couples of strategies that you can adopt. First thing you need to do is open an IRA account. Making a choice between traditional and Roth IRA may be a bit hard; my advice is choose the one that suits you best.

The 401(K) plan is very important. You need to contribute to it. I advise you to hire a financial advisor. An advisor knows what tax bracket would suit you best. The 12% tax bracket might sound tempting if you don’t want to feel a bite in your monthly budget, but a Roth (401K) feature comes with an expansive list of benefits even though it uses income after tax.

Planning for retirement saving is no different from overall financial planning. You get better at it by taking advice from professionals and apply your own intelligence. Systematic retirement saving is among the best ways to manage money.

Polish your credit report

Think your credit report only decides the likelihood of getting a loan? Think again. An excellent credit report improves your financial position; it helps you in more ways than you think. You get better car insurance rates, teleservice providers will ask you to sign a contract with them but without the “necessary” security deposit. In other words, a positive credit report opens many doors of opportunities for you to manage your money.

What do better auto insurance rates mean for your finances? It means you won’t be hard-pressed to pay it every month. You can save the money or spend it on some other purpose. A polished credit report, therefore, is essential for wisely managing money.

Consider debt consolidation

If you have debt, consider merging them. There’s a disclaimer though. If you think you can pay off the debt in a year or two, don’t go for consolidation. Consider consolidating your debts if and only if the cumulative amount is difficult for you to repay. Students are the biggest demographic that opt for debt consolidation. So if you are not a student, carefully weigh in the pros and cons of debt consolidation before giving it a final thought.

Summing up

Money management is easy when you follow the right steps and make the right decisions. There’s no universal definition of right decision. Follow the tips shared here and trust your gut. Only then you’d be able to manage your hard-earned money.

Simply avoid 5 Money Mistakes to have a financially secured future

Every year we all make a lot of new year resolutions and mostly take it to the following year & it goes on. And the same goes with our money handling habits, we think of not committing the same money mistakes but still, fall into it. So, what’s the catch? How should we refrain ourselves from falling into the potholes of bad financial habits?

Avoiding a few money mistakes can change the financial perspective of your life. There are a few things that you can do to simply create a balance between your lifestyle and finances. In short, by simply cultivating a few good money habits you can change your world upside down and have a financially secured future.

Let’s give a new shape to our current financial situation by simply avoiding 5money mistakes. And what you get in return is more savings, better spending habits and most importantly a well-secured future.

5Money Mistakes to avoid for a better financial future:

#1. You don’t have a financial plan

One of the biggest money mistakes that drip your future is not having a financial plan. You might have a house, car, children, loan payments etc. and without even knowing you might delve into your savings or borrow more money causing a financial threat to you and your loved ones.

A financial plan should consist of your income, your expenses, your savings, and your insurances. You should have a track of all the expenses you make be it for a penny or more so that you will know where your money goes at the end of the month. A financial plan would help you to prepare for the costs (both expected and unexpected), look for investments and options for extra-income as well.

#2. Never save from what is left after spending

If you want to have more savings, then the first step to take is stopping saving from what is left at the end of the month after you spend. Create a category in your monthly budget as “savings” and start contributing a fixed amount every month as soon as you get your paycheck. To save more efficiently, you can create financial goals to save for. Also, you can create an automatic transfer every month from your checking account to savings account. Put a certain amount every month in your emergency fund.

#3. Never put off paying your credit card debt

Another important money mistake to avoid is delaying your credit card debt. One of the best ways to avoid credit card debt is by creating a calendar and stay on track with your credit card payments. Never put off paying your credit card debt as you’ll end up paying the interest plus the late fees. Credit card if used wisely can be of great help. Use your credit card for the amount which you think you can repay within the timeline. Additionally, limit the number of credit cards you have.

Most of us use a credit card in case of an unexpected expense. So, if you start saving for an emergency then you can avoid falling into credit card debt.

#4. Never spend beyond your limit

Your money habits define your choices. When you understand the thin line of difference between your needs and wants, you will be able to make the right financial decisions.

Following are a few better spending habits:

• Create a shopping list to avoid impulse buying

• Switch to bulk purchases for things that can last longer

• Buy seasonal fruits and veggies (both healthy and economical)

• Collect and use all coupons, discount vouchers etc.

• Wait for the year-end sale to get better deals

• Cut down on gym memberships and look for alternate free options like yoga, jogging etc.

• Cook your meals and pack it for lunch

• Try out local cuisine at near-by eateries

• Look for free recreational activities such as a picnic in a park, open theatres, community programs etc.

#5. Never ignore your insurances

The thought about sickness, death, loss of property etc. can be disheartening but you need to think of protecting your assets, yourself and your loved ones from such events. If you have a family and dependents, then you need to take a step beyond savings which is insurance. You need to consider the following insurances such as life and disability insurance, health insurance, property insurance etc. to protect yourself (your family) and your assets.

Summing up:

Life is as simple as you make it. There are always some golden rules to follow especially when it comes to better money habits and a few money mistakes to avoid. You can make a huge impact on your financial situation by simply cultivating better spending habits and refrain yourself from making the 5 money mistakes mentioned above.

How to manage money efficiently by simply avoiding these 5 money mistakes

How to manage money?

Finance management is one of the things that we never learn from school instead will have to explore with experience. There is no shortcut to becoming a pro in financial management. But there are some mistakes that can create a bad shape on your finances. What will happen if you know what these 5 mistakes are, and you can give a new turn to your financial future by simply avoiding them?

The curious query!

Most of us are more curious to learn how to manage money efficiently. The good news is you can simply avoid these 5 financial mistakes mentioned below to have better savings, good financial management habits, smart spending habits, and a secured financial future.

We share with you these 5 money mistakes that simply answer your query of how to manage money efficiently?

5 Money mistakes to avoid or simply know how to manage money:

 

#1. Avoid warehouse club-style shopping

One of the biggest mistakes to avoid is doing a warehouse club-style shopping as you might end-up be buying things that you might not need at all. According to a study, if you’re among those who shop at the wholesale clubs such as Sam’s Club, Costco or BJs then, you would be spending and eating more.

Why you should avoid warehouse club-style shopping?

  • Hefty annual membership costs
  • The compulsion to buy everything in bulk (few kinds of stuff get spoiled when kept beyond a period such as cheese, dairy products) You can’t buy everything in bulk.
  • The temptation to impulse buying

Plan B:

  • Before you go shopping make a list of things to buy and stick to it
  • Shop at local markets and grab the available coupons
  • Look for a weekly discount at nearby supermarkets

#2. Avoid being blindfolded about your money

Do you have the track of every penny you spend and where all your money goes at the end of the month? If not, then its high time you stop being blindfolded about your money.

Plan B: Knowledge is power!

One of the efficient ways to manage money is by talking about it. You can discuss your financial ups and downs with a group of like-minded people or your family and friends. This way you can get new ideas on how other people tackle their problems or how to manage money in a better way. You can share your knowledge and learn from others on money management ideas.

The tech-savvy people can even choose from a range of apps to share and compare their financial life.

#3. Avoid going for the easy payment options

Today, we all prefer a fast and easy process for everything so has retailers and payment systems have streamlined their process. With all the ease, you’re less likely to know how much you’re spending or over-spending. You need to know how much you pay for each item and if it is worth it. Every time you spend on an unnecessary thing, you’re losing what can be saved for future.

Plan B:

Fix a budget for every week or month and keep the cash aside to spend.

#4. Avoid saving money on what is left at the end of the month

The ideal way to build your savings is by putting 10% of your income every month into your savings account. Saving should be your first thought and not what is left after spending.

Plan B:

  • Add a category as “savings” in your monthly budget
  • Fix an amount to save each month
  • Switch to automatic transfer from checking to savings account

#5. Avoid your credit to be misused by someone

You might be familiar with the Equifax data breach, where 145 million people’s personal and financial data was hacked. Before someone misuses your credit card, you can take a preventive action.

Plan B:

Put a credit freeze to your 3 credit reports. You can still use your existing credit, but no new lines of credit can be established. You might have to pay some amount to establish a credit freeze and details are available on the Equifax website.

Summing up:

You would have understood how to manage money efficiently by simply avoiding these 5 money mistakes to have a financially secured future. However, the best results come only when you implement these at the earliest. Just knowing the hacks will not do good until you start applying those at your end. So, start evaluating your financial situation and review if you’re making or made these 5 money mistakes and how you can take a counteraction to avoid it soon. It is important to know where you stand financially and track your progress every now and then. This will motivate you or even be a guide when you’re diverted from the path.