How To Take Control Of Your Finances
By Fuzia on The Capital
Learn to manage your expenses before it occurs. You cannot leave your income in the ‘I will figure out’ bucket because most of the time that can lead you bankrupt by the end of the month. Financial management is one of the most essential parts of existence today.
Financial management is one of the most essential parts of existence today. We are surrounded by consumerism and most of us today are living above our means, especially millennials. As brutal as it may sound, the closer we are getting to consumerism, the more we are losing on our financial discipline. So, today we have brought you 7 Do’s and Don’ts to take control of your finances and be financially sound:
1. Do: Pre-Plan Your Expenses Beforehand
Learn to manage your expenses before it occurs. You cannot leave your income in the ‘I will figure out’ bucket because most of the time that can lead you bankrupt by the end of the month. Most of us today are living above our means and not planning your income can lead you to bizarre. To invest you must save and to save you must plan! Visit online finance consultation websites to explore various investment modes suitable for you.
2. Do: Learn The Golden Formula
No school will teach you financial management and on and off chance, you have been taught the wrong formula all this while. Here’s an illustration for you -
The formula we were taught —
Income — expense = Profit
However, the correct formula what should have been taught to us is, -
Income — savings = Expense
This essentially should have been the base of financial management but it is never too late to implement the formula. In fact, the sooner, the better!
3. Do: Track Your Expenses
This one of the most crucial parts of financial management. The problem with millennials today is not tracking their expenses. Managing your accounts is not as difficult as it was previously. There is en number of apps that can track every transaction of yours and give you a detailed report on your spending.
How often has it happened to you that your salary was wiped away in a few days without realizing it? Not tracking your expense is a sign of poor financial education. You can now easily monitor your expenses every now and then and curb it whenever needed. So make sure you embrace the technology and start tracking your expenses today!
4. Do: Start Saving Today
Needless to mention, to take care of your finance is to start saving. It is never too late to start saving but firstly, try to get yourself out of any high-interest debt you are paying. There are a few things you must understand in your early twenties. Credit cards are tempting but try to avoid getting one unless you learn to use it carefully. Once you do, do not overburden yourself in the lure of today. Primarily, avoid minimum payments and settle up your unnecessary liabilities as soon as you can.
Once you get rid of all the major liabilities, start saving and eventually start investing. The power of compounding is what will get you a stable and sound financial life ahead. More importantly, whenever you start investing, make sure to build a portfolio and invest in various profiles but it all starts with Saving.
5. Don’t: Impulsive Expenditure
Being impulsive is natural but impulsively shopping and spending can be very addictive and land you in trouble. We live in an era of consumerism and are sold emotions instead of products. The consumer industry hires social scientists who have studied human behavior for years to get a marketing edge.
The happiness and desirability that’s being sold are tempting indeed but you got to learn how to differentiate. The sales teams will make sure your want becomes your necessity but you must educate yourself to figure out what is necessary and what is not. Do not fall for whatsoever sale that’s buzzing around. Moreover, try the 3-day technique. Keep the product in your cart for over three days and buy it if you still keep it’s a miss.
6. Don’t: Ignore Your Credit Score
EMI bounce, Check Bounce, Non-Maintenance of Minimum Balance, Credit Card Settlement, etc. may not seem like a big deal to you in your twenties but are of par importance. Consider credit reports as your adult GPA. Sooner or later you might regret not maintaining it.
So the better your credit scores are, the more creditworthy you are in the eyes of financial institutions. A negative credit score can do the reverse of it. It is of prime importance before issuing a credit card or any loan.
7. Don’t: Keep Up With The Joneses
If you are not aware of the famous term ‘Keep up with the Joneses’, it means a negative comparison between two different classes in a social circle. Material purchase is tempting but a competitive approach can be troublesome for you. Living above your means is destructive for financial management.
A person may drive a BMW but still be in debt head to toe. On the other hand, you can drive a Honda with the utmost financial stability. The power of differentiation can save you and your family from any financial constraints in the future.
These were 6 do’s and don’t that you must consider taking control of your finances. Nothing can lead you to a sound financial life than saving. So get yourself out of any high-interest debts, use a credit card sensibly and start investing today and let the money work for you. All the best!
Originally published at https://www.fuzia.com.
