Top Money Management Tips
Personal Finance

Top Money Management Tips To Achieve Financial Freedom

Have you ever heard of the phrase, “Money can’t buy happiness”? Well, it really can’t. However, it sure can buy you a lot of things that can bring you happiness. And nobody knows this better than people who are good at money management. Without a proper grip on your finances, you’ll always feel as if you are one step away from disaster. If you’re not a fan of living dangerously, it might be a good thing to learn how to manage your money. After all, life is so much easier when you can manage your finances properly. 

School probably never taught you how to do your taxes and manage your money. An unfortunate slip on part of the education system. Yet, a lack of education in your youth is no reason not to amend that. Consider this, almost 80% of Indians run out of their salary before the end of month. And whatever happens, you do not want to be a part of that 80%. Just a few basic decisions and commitments can make a huge difference to your financial situation. So let’s nosedive into some top money management tips to keep your finances on track.

How To Manage Your Finances

Here are top money management tips to help you manage your finances in a better way.

  • Be aware of your financial situation
  • Have realistic financial goals
  • Plan everything
  • Create a budget
  • Keep aside emergency funds
  • Keep a track of your expenses
  • Stay away from debt
  • Manage your expenses
  • Invest smartly

Let’s dive deep into each financial tip one by one and get a better understanding at how to manage money.

Understand your current financial situation

Whether you’re in dire straits or well off, it is important to take stock of your current finances. It might be challenging, but be honest with yourself about it.  Write everything in a notebook to see the bigger picture. Don’t make excuses to exclude any debt or unnecessary expenses. After all, you don’t need a PlayStation if you’re living check to check. 

Create you goals for money management

If you are solemn about money management, then set goals for yourself. There are no set parameters. It all depends on your current financial situation. However, keep them realistic and make sure they’re achievable. You don’t want to set unrealistic goals and then give up at the first sign of failure. Setting a goal will ensure that you stay focused and don’t deviate from your path. 

Make a plan

If you’re having money problems, then you’re most likely an over spender. In such a case, you need some top money management methods. For starters, to achieve your financial goals, it is very important to make a plan. Otherwise, you might find yourself regressing into old habits and overspending. Carefully make a plan which you can stick to. Start by only spending on what you need to. 

Budget your finances for money management

Put your plan into action by allocating a budget for it. This is where you do the math and work with numbers. Put your finances against your plan and ensure that they fit. Make changes accordingly. Budgeting is a tedious affair. Yet if simply adding numbers can improve your life, there’s no reason not to do it. 

Make an emergency fund

Life is a bag of surprises. Some are good, some are bad but most importantly some are expensive. You don’t know when you’ll come across a situation where you’ll need funds. Sticking with a budget is good, but you need the flexibility to get through life. Allocate a portion of your income towards any unseen expenses that may pop up. 

Track your expenses

Manage your money for financial freedom

You will be surprised how many times people are shocked by the total cost of their irrelevant spending. A drink here, a takeout there, and before you realize it, you are over your allocated budget. Keep a strict track of your spending habits. Either keep the receipts or write it all down. This will help you with money management and help identify places where you find it difficult to track your expenses. 

Don’t add any unnecessary loans

Just because you can do something, doesn’t mean you should do it. You will most likely find yourself qualified for several loans. However, as tempting as it may be to get that loan for a new car, restrain yourself. The bank only knows your income and your liabilities on your credit report. Just because it is related to money and money management, doesn’t mean the bank is right. Don’t think that you are capable of taking a loan just because your bank approved it. 

Cut both old and new expenses

Once you get a good idea of your finances, cut off any unnecessary expenses. Even a small cut can add up annually. Some unnecessary expenses might come from your cable or takeout’s for lunch. Also, be sure not to add a new burden to your monthly budget. At the end of the day, you can probably live without an OTT platform subscription. 

Invest your money

Saving money is great. But putting your money to work is even better. If you are in for the long term, then understand the time value of money in financial management. Idle money depreciates over time. Investing will help you beat out the depreciation caused by inflation (increase in prices over time) and give positive returns. You will be able to grow your money and compound it the longer you invest. 

Bottom line

Money management isn’t’ rocket science. Just because it is related to money and money management, doesn’t mean you need to have an MBA. Understanding personal finances is easy enough. You are not in charge of a company but of your own private funds. Just following some basic rules will help you solidify your financial foundations. Implement these tips and you will see results over time. Don’t forget, even you can learn how to manage your money effectively. 

FAQs

  1. What are the 5 areas of personal finance?

The 5 areas of personal finance are income, spending, saving, investing and protection.

  1. What is the 50-30-20 rule for managing money?

The 50-30-20 rule was given by Elizabeth Warren. It divides up the after-tax income into various parts.

Expense PercentageFunds Spent on
50Necessities
30Frivolities
20Savings
  1. What is the 30-day rule?

According to the 30-day rule, you stop all impulse spending and unnecessary purchases for 30 days. If you still want the item after 30 days, then you can go for it. 

  1. What is the 72 rule in finance?

This rule is used to determine the amount of time needed to double your savings. You divide 72 by the rate of your return on your savings to get the years it’d take to double your investment. 

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