A Crash Course in Money Management for Beginners: 9 Must-know Tips

It can get confusing especially if you are just starting out because most of us have not been taught how to manage finances or do taxes in school.
Do you want to manage your finances better but don’t know where start? Do not panic, you are not alone. Research indicates that a lot of people tend to get overwhelmed at the thought of managing money. It can get confusing especially if you are just starting out because most of us have not been taught how to manage finances or do taxes in school. It will definitely take some time to learn how to be financially savvy but it is not impossible.

Personal finance management is not rocket science. There are always new ways to handle your money. However, following some basic rules can always help. Spending less is always wiser than splurging, investing is better than letting your money sleep and having a plan in place is better than not having one at all.

So, fret not. If you’re a taking your baby steps into the financial world, read on to understand where and how to get started.

    1. First, make a realistic budget: Budgets are often looked at negatively. Remember, a budget is not a strict enforcement, it is just a guideline. And, the first step to take before making any financial decision, is to chalk out a realistic budget. Sit down and take a look at what your are earning, what you are spending and what you are saving. See if you are spending more than you are saving. Set a monthly budget and stick to it. A budget can be a ticket to a dream holiday or any other financial goal, even if it means saving up to buy a television set.
    1. Learn how to use your credit card the right way: A credit card can be your best friend if you know how to use it wisely. If you do not already have one, do not hesitate to apply for a credit card. There are many perks that you can avail by using your credit card including free lounge access at airports, extended warranty on purchases, complimentary vouchers, discount at selected outlets, etc. The other thing is that you can also get rewards for spending money! Yes you heard that right. There are many reward cards that offer cashbacks to customers on certain purchases.
    1. Start building your investment portfolio: Once you have started sticking to your budget and gain control over your expenses, the next step is to start making your money work for you. Do not stack up money is a low-interest savings account, instead, start building your financial portfolio. Invest is a mixture of low-risk to medium-risk investments and then, use a certain percentage of money to build assets. Invest a certain sum of your savings in a fixed deposit and put aside some money each month in a Systematic Investment Plan (SIP). This is an ideal plan for those who are just starting out with making investments.
    1. Have some good debt: All debt is not bad debt. Taking a loan to build an asset will only repay you more in the long run. For example, it is always wise to apply for a home loan. This means that you are investing in an appreciating asset like a house, the value of which will only increase over time. So the next time you pay rent, think again, and take a look at the home loans in India.
    1. Chalk out an insurance plan: Having life insurance and health insurance is a must in today’s times. While a life insurance policy can help you take care of loved ones in case of an unfortunate incident, help you deal with debt and also help you meet your retirement goals, health insurance can save you from unexpected medical bills. Remember, it is always wise to apply for an insurance policy when you are younger because the premiums are much lesser.
    1. Do not live paycheck to paycheck: Just because you earn a certain sum of money every month, it does not mean that you have to spend it all off. Having money in your account can be tempting but you need to set a spending allowance. Remember, how you would spend your pocket money in college? Follow the same path even after you start working. Give yourself a monthly spending allowance and put the away the rest in form of savings and investments.
    1. Have a few side gigs: Do you have a hobby that you would like to turn into a business idea? Explore some ways through which you can make some additional money on the side. If you are good at making crafts, you can sell some of your homemade goodies, you can also give singing or dancing lessons. Not only will this help you beat stress and engage your mind, the additional money can help you save more, and help you build a better financial portfolio.
    1. Have a retirement plan: Another thing that all newbies need to do is to have a plan in place for retirement. If you want to create a retirement fund, experts suggest that you need to start saving from your very first job. So do not forget to include this in your financial portfolio.
    1. Learn how to manage your taxes: Last but not the least, learn how to do your taxes. It may seem overwhelming in the beginning but if you just read up a little, it will go a long way in helping you save some money. Understand terms like assessment year, financial year and take a look at all the investments that will give you a tax benefit.

It is always wise to start small and learn as you progress. It may initially seem confusing in the beginning but with a little bit of research and reading, it is not that difficult to manage your finances successfully. There are many personal finance apps out there that can help you get things organised. It also helps if you take financial advice from members of your family. All the Best!

[“Source-news18”]