Money Management is as important as earning, for the fact it is more important. What is the point of earning good money when you still fall prey to the month-end crisis? You see, many people earn money but there are only a few who manage them well. It would have been better if they taught about money management in college. Alas, they don’t. So you can only learn it from experience and experiment. But the problem is that in this phase there are chances of you losing money.
If you haven’t learned managing money from your parents then only you can only rely on yourself. Most people think you must strategize and plan to actually save up a good amount of money. However, the reality is a bit different. It is good if you have a plan but what matters is you taking the plan seriously and putting it into practice.
Wanna know interesting ways to save money smartly and achieve all your goals? Then, stick till the end to find out.
Steps to Manage Money
Saving money is truly hard if you have just graduated from college and you still don’t know the in’s and out’s of the world. So these steps will help you in saving your money and becoming financially secure.
Check your finances
Before anything else, first, you must do a quick check-up on your current financial situation. You must know where you stand in money management to find the problem and its solution. This is the first and foremost step as many people clearly don’t know how much they’re spending. So first take a look at your financials and analyze your expenses and incomes to understand whether you’re overspending or spending just right. Start with your income, calculate all your income i.e., from salary to online all sources of income. See whether your income is stable or varies monthly. Also, list down the sources of your income too. Then comes your expenses from rent to miscellaneous expenses leave nothing out. Also, include the surprise expenses that come once in a while. Then include the taxes you pay also.
Tune your mind
As you have made the calculations and find out the amount of money you spend regularly if you’re spending reasonably then it is fine. However, if you have found that your spending patterns are a little disturbing then make sure you correct them. Yup, that is the important thing for you, changing your mindset towards money and spending. Try to question yourself before you make any expense if your mind says no, you don’t need it right now. Then restrain yourself from purchasing it. This way you can stop yourself from making so many unnecessary purchases and slowly your finances will get on track too. You see people will never have enough money to buy all the things they want and do all the things they want. However, having enough money as a safety net gives you peace and confidence to take up new risks and challenges.
Financial Plan
This could be considered as the most important step that can change your finances for better if done right. As you have already understood your financials. Now is the time to set your financial goals. You see, whenever there is an end goal you will naturally work harder to achieve it. Don’t you think so? When you know what you’re putting all these efforts for, you will feel motivated to work. Also while setting goals to make sure that they are realistic and achievable. Because if you put your efforts into achieving something that will take 10 years you will eventually lose your motivation.
So keep your goals for the short term. Once you have set financial goals, then it is time to come up with a plan to achieve them. Yup, if you go head first there are chances that you will hurt yourself. So you need a plan to reach them. Set your financial priorities first. Focus on them. Experts suggest you actually focus on paying off your debts then you can focus on buying or investing. First, segregate your debts into high interest, medium, and low. Then work on paying them off in order. This way you will understand how far you have finished paying off. It is your wish for what you want to focus on. Be it paying off debts or buying assets, select according to your income and reach them.
Make a budget
Making a budget is truly an important part of learning how to manage your money. Once you know your income and the pattern you spend. Sit down and draw up a budget and strictly stick to it. It is best to create a monthly budget. There are different budgeting apps or methods that will help you. So take your time and check all of them and then choose the one you like. But account every dollar you earn and every dollar you spend. Be it an envelope system or Zero budget system or 50/30/20 budget just follow a budget plan that works for you.
Emergency fund
Emergencies always come unannounced and it would be bad if you’re not well prepared. So just make sure that you have reserves when it comes to emergencies. You can put a little of your saving aside for the emergency funds. You can use it in case an emergency pops up. Your emergency fund can be as small as you want or as big as you want.
Credit report
Never forget about your credit report because it impacts your financial life. So check it frequently, checking it is absolutely free. As you see your credit report is the one that will help you to get a loan to buy a house, car. The lender will determine whether to give you a loan or not. So you must review your credit report carefully so that you can check if you have any errors.
Wrapping up
So there are a few simple steps that you must follow to manage your money accordingly. Wanna earn more money to improve your financial situation? Then check out the other important things to make money. You may find an interesting side hustle that will bring you good money.
