10 Tips for Better Money Management

Good money management is not just meeting all your necessities and paying off the bills. It’s also where you are able to save and invest. Life becomes easy if you have good financial management skills. Listed below are some of the methods that  help you manage your money in a better way.

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1. Use a Debit Card to Track Spending:

Tracking your monthly expenses become easy if you have a single source of expenditure. In order to simplify this process, link your debit card to your salary account and pay for the various purchases and services availed. If you are paying using your credit card, make sure to pay your bills in full each month.

2. Keep Track of Your Net Worth:

The net worth of an individual is the total value of everything owned minus total debt. Keeping a track of net worth helps manage your money in a better way. Spending more than you make, lands you in the debt trap. This negatively impacts net worth. It is always wise to limit your spending within monthly income.

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3. Start saving Now, Not Later:

Regularly depositing money in your savings bank account inculcates financial discipline and after a point of time, it turns into a habit. Savings add up quickly and help you become responsible towards finances. This is a lesson which you must follow across a lifetime.

4. Prepare for Periodic Expenses:

Expenses like car repair, house maintenance services, birthday parties and emergency medical expenses come unannounced. Keep yourself financially prepped for these expenses. Apart from investing money, make sure to have cash handy to meet such expenses.

5. Save for Emergencies:

Having a contingency fund is just as important as investing money. A contingency fund comes to the rescue in emergency situations. You do not have to run from pillar to post to borrow money during emergencies. This helps you lead a stress-free life and face the hurdles of life with confidence.

6. Diversify Your Income:

To enjoy healthy finances, make sure to diversify your investments. Do not invest all your money in a single investment option. If all your savings are in equity or a bank fixed deposit, step back and think twice. Diversify your income and invest in a stream of income generating investments. Invest in investment schemes that offer inflation beating returns. If you have long-term investment goals, then opt for real estate, PPF or even equity mutual funds based on risk profile.

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7. Buy a House You Plan to live in:

The rising cost of real estate in cities may force you to consider renting a house as an option. But, owning your own property is always beneficial and it helps build substantial wealth due to rising prices over the long term.

8. Make sure you are paying the best prices:

You can compare the prices of various products online like grocery, household items, furniture, clothes and so on. Make sure you are paying a reasonable amount to avail these services and products. Look for discounts, cash-backs, and coupons to avail the best deals on purchases.

9. Limit your credit card purchases:

Make sure to use your credit card only up to a certain limit. Credit cards give you the freedom to purchase without immediate repayments, but charge very high interest if the bills are not settled on time. Restrict the use of credit cards only to grave emergencies. If you are a frequent credit card user, make sure you pay your bills on time to avoid the piling up of debt.

10. Practice makes a man perfect:

It might be difficult for you to plan ahead of a purchase or to restrict the shopping impulse. However, with time, you will learn the art of  managing money. This cannot be attained until you make the above-mentioned points a part of your daily life. The more you are responsible towards money, the better your personal finances will be.

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