Be Money Smart: How To Manage Money Wisely?
Saving money comes naturally to some, but for some, it is not easy. Imagine having so many places to spend, but turning a blind eye to them only to embellish the bank account. But, on the other hand, not saving money at all is also a dangerous prospect. Again, imagine encountering an emergency and not having enough funds to deal with it.
Saying that saving money is necessary is an understatement. But, if you are smart with your money, you can get the best of both worlds. Here are some tips that might help you.
Tip #1: Never lose sight of your spendings
If you are an impulsive shopper, the when and where of spending money would be your least priority. You just spend.
Watching your closet packed with clothes, home brimming with the latest gadgets, and a gallery filled with party and vacation pictures might be thrilling prospects, but do spare a look at your bank account.
Mindless spending can take a toll on your savings. Therefore, you should always be prudent with your money. It might be tough to cut down all the expenses in one go. So, you can start slow. Start by watching where you spend. Keep a track of your expenses every month, and you will realize there is scope for improvement.
Note what, when, and where of your spendings or use personal finance budget calculator applications. In no time, you will be able to spot many non-essential items on your list.
Tip #2: Allocate money
Budgeting can be the scariest term for spenders, but it is synonymous with wise money management. Again, go slow. You need not create a strict budget and swear to it. Try to find a middle way.
Instead of stopping shopping or eating out altogether, allocate a certain amount for each department. So, for instance, if you spend $500 every month on shopping, bring it down to $300 or $250.
A budget that does not force you to compromise your lifestyle is always easy to stick to.
Tip #3: Save first
Instead of spending first and then saving whatever is left, take the reverse route. Once you receive your monthly income, put some part of it into your savings account and then spend the rest. It will also ensure that you don’t splurge on unnecessary things.
A small change in the chronology can go a long way.
Tip #4: Think of short-term and long-term savings
Dividing your savings into short-term and long-term will give you a clear picture of your expectations and make money management easy.
Start by listing down your short-term and long-term objectives. Say, for instance, your short-term objectives are going on a vacation next month or buying an expensive gadget. Your long-term objectives are buying a home or saving for retirement. Now, divide your savings into these subcategories and save for each of these things separately.
Knowing your goals will help you stay motivated and spend your money wisely.
Tip#5: Say no to debts
You may be tempted to take a hefty loan to fulfil your dreams, but this will throw you into the vicious debt trap. Taking multiple loans to buy an automobile, a home, or for a life event will bring you closer to your life goals, but the high-interest rate will wreak havoc on your savings. And, not to forget, it will affect your credit score.
Well, not taking a loan is not a practical option, but you can at least try to limit your debts. If you are already into this trap, look for debt management options to get out of it as soon as possible.
The bottom line
Not being wise with your money can put you under a massive financial burden. With these easy tips, you can get rid of the burden and save big without compromising on your lifestyle.