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5 Keys to Successfully Managing Your Personal Finances

IndianMoney.com Research Team | Posted On Thursday, April 18,2019, 04:49 PM

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5 Keys to Successfully Managing Your Personal Finances

 

 

Trying to successfully manage your personal finances? Here are 5 tips and tricks to help you strategizeas well as control your personal finances in an effective way:

Detail Your Financial Goals

Acknowledging and writing down your financial goals is the first step you can take to gain control of your personal finances. Writing down your goals also helps you remain motivated and focused. To set your financial goals, make sure to categorize them as short term and long term plans. Setting your goals helps you retain or hold the money for a specific purchase and plan your future in a better way.

Develop a goal chart and write down your financial goals. Prioritize your goals by listing them down as “needs” and “wants”. First, plan to cover your needs and then with the remaining budget you can plan how to save each month to fulfil your financial goals.

Flesh Out Your Plan:

Financial Planning can help you meet your money goals but only if you put the plan into action. It involves multiple steps. An ideal plan will consist of three steps: controlling your budget, creating a spending plan and managing debt.

Budgeting allows you to create a spending plan – it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of it if you are currently in debt.

Once you have accomplished these three things and settled your debt, you will have surplus money for working towards your goals. At this point, you can start focusing on some of the goals you have set for yourselves.

SEE ALSO: Golden Rules of Financial Planning

Make and Stick to a Budget:

Creating a Budget is one of the best ways to reduce unnecessary expenses and succeed financially. Think of a realistic budget and categorize your money carefully. Firstly, divide your monthly income into three parts. The first part of your salary will go towards your necessities like home rent, groceries, utility bills, and other necessary monthly expenses. The next part of your income should go towards your investments or loans. Devote a budget for paying off your loans and also investing in your long term goals like retirement plans, term plans, etc. The money that is left can be used to save for the goals you have set for yourself. This will help you finance the different necessities like purchasing a vehicle, a down payment for the purchase of a new apartment, a vacation or sudden medical expenditures of your family. It is important to save money to avoid getting into debt to pay for your necessities.

Pay Off Debt:

Debt is a big obstacle to reaching your financial goals. So eliminating debt is a priority. Not settling the debt within the stipulated time can lead to further problems. With a little bit of planning, you can get rid of debt easily.Make a repay list for the amount you have borrowed from different sources. The next step is to make sure you repay them as per your monthly income. If you are not able to save much money from your monthly salary then create a plan to save as much as possible. Stop making unnecessary expenditures and spend your money on what’s necessary like grocery, utility bills, rent or EMI. Keep a track of your monthly expenses and chalk out some of the ways through which you can save money. Also, make sure not to acquire new debt. Borrowing money to buy things that you cannot afford can lead you to a debt trap. If you have a credit card borrow as less as possible to reduce debt.

Once you step out of your debts you need to make a commitment to stay out of debt. Creating a contingency fund can help you stay away from debt. Also, avoid using credit cards and make it a habit to settle your bills on time.

SEE ALSO: How To Set And Achieve Financial Goals?

Don’t Be Afraid to Ask for Advice:

Once you are ready with your financial plans and are ready to begin investing, you must consider speaking to a financial planner who could help you make better investment decisions. A good financial advisor will guide you through all investment options and will share the risks involved in each of them. With sound financial knowledge, you will be able to find a product that would match your investment profile and help you work towards your goals as quickly as possible. A financial planner can also help you with your budget and requirement which is an additional advantage.

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Effective financial planning can shape your life and improve it in countless ways. Each of these tips can have a profound impact on your financial health and their cumulative results may prove to be life-changing. Try to incorporate some of these steps to your personal management efforts to gain control of your finances. 

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