Personal Finance Management: A General Guide

Personal finance management is the process of planning and managing money. Financial activities like budgeting, spending, banking, insurance, loans, savings, investments, tax planning and estates planning come under personal finance management. Better money management means reducing spending, improving ability to invest, and achieving financial goals.

Tracking Spending to Improve Finances 

It is important to track spending to improve our finances and better money management starts with spending awareness. Money management app like Money Track can be used to track spending across categories.

Creating a Realistic Monthly Budget

It is ideal to use monthly spending habits and monthly take home pay to set a budget. Budget is a better way to encourage better habits.

Building Up Savings

Creating an emergency fund is absolutely important and it can save us from risky situations. We should make general savings contributions to strengthen our financial security in case of job loss.

Paying Bills on Time Every Month

Paying bills on time is an easy way to manage money wisely and it comes with excellent benefits. A strong on time payment history is helpful in lifting credit score and improving interest rates.

Cutting Back on Recurring Charges

It is a good idea to review spending for charges like monthly subscriptions to streaming services and mobile apps.

Saving up Cash to Afford Big Purchases

Certain types of loans and debts are often helpful when making major purchases and cash is the safest and cheapest buying option for other big purchases.

Starting an Investment Strategy

Employees can find out whether their employer offers 401k matching and it is worth considering opening a retirement account or other investment account. The path to better financial management starts with changing our own habits and great money management skills will serve throughout our life. It is to be kept in mind that the foundation of good money management is a rock solid budget. Our hard earned money should be saved, invested and spent judiciously. Money can be saved through effective money management.

A vital aspect of money management is keeping a track of expenses and reviewing them periodically. Making a budget is the first and foremost step of money management. Creating a budget has been used for centuries and saving first and spending later is important. It should be ensured that we are prepared for future contingency and the chances of overspending or exceeding budget should be eliminated. Having a financial goal allows individuals to stay focused and avoid overspending.

It is an elegant idea to start investing in financial products in order to achieve long term financial goals like dream house, child’s education, retirement and much more. Saving should be started as early  possible and it should be started from our first pay cheque. Wealth creation plans are best for long term savings and financial protection is the striking feature of wealth creation plans. Equity funds, balance funds, and debt funds are better options. Taking on multiple loans affect credit scores and it is important to limit debt as much as possible. Being dependent on credit cards and taking too much debt can adversely affect budget. It is better to stay financially prepared for any kind of uncertainties in life.