Financial literacy is inevitable for any human being who wants to lead a healthy and wealthy life. We do see the success stories of many businessmen and even individuals who made millions of dollars through proper money management and investments. Everyone wants to be like that, but the question is how to be like them? There is no rocket science in it, but a few fundamental and essential money management strategies. Let’s explore a few of the top tips shared by the experts.
Have a proper plan
I don’t have the fullest trust in your memory capacity, make a financial calendar to pay off your taxes and other recurring payments periodically. Pull out a credit report from time to time and also plan the money to-do things perfectly. There are many financial planner apps available now, which will be handy regarding effective personal finance management.
Keep track of interest rates
Let’s have a quick Q&A to explain it better.
- Q: Which loans to be paid off first?
- A: Those who have the highest rate of interest.
- Q: Which savings you should prefer to choose?
- A: The ones who have top interest rates.
- Q: Why credit card debts give you so much trouble?
- A: It’s primarily because these have compound interest rates.
- Q: Which loans or line of credit to be considered?
- A: Which feature effectively lower interest rates.
So, the bottom line is that it is very important to pay attention to the interest rates at the first point whenever you take a financial decision or commitment.
Keep track of net worth
The net worth of an individual/business is the difference between the assets and debts. This is the right number which can tell your financial health and where it is heading to. If you want to manage your finances well, then keep a close eye on your net worth, and this will help you to keep you apprised about the progress towards the set financial goals or on the other hand, may warn you if you are backsliding.
#Budget like a pro
Set a periodic budget
Having a proper budget is the base of meeting any goals in your life. Not just in case of a business, but you need to maintain a realistic budget as in individual too if you are in charge of your or your family’s money matters and want to proper.
Allocate 20% of the income into financial priorities
Priorities to build up savings for emergency purposes, planning for your retirement, paying off the existing debts, etc.
Up to 30% of the income only for lifestyle spending
Entertainments and personal lifestyle activities are important to lead a happy life. This may include dining out, watching a movie, planning trips, or anything which doesn’t cover the necessities, but unavoidable. By sticking to this 30% rule, you may be able to save and also control splurge.
Take the help of a financial analyst
It is advisable to take the help of Personal Finance Analyst if needed, in case if you find it difficult to manage your money matters by yourself. For busy businessmen and professionals, it is ideal to get a reliable consultant to manage their finances in your best interest.
#Get money motivated
Make a vision board of finances
If you need some real motivation to adopt adorable money habits, then you can try and create a money vision board, which will keep on reminding you about your financial goals and hold on track with your financial goals.
make unique spending mantras
Pick out positive phrases which will act as a rule of thumb to regulate your spending habits. Once you get obsessed about buying something, you may ask yourself “is it needed emergently or later?” These mantras will help you revisit your plans and make it more cost effective.
Make short-term tiny money goals
A study had shown that the far-away, typically bigger money goals, the more likely people tend to give up on it. It is, of course, necessary to have bigger financial goals, but along with it, its ideal to also set smaller and shorter-term money goals, which will always be easier to achieve and also will give you some instant satisfaction and confidence to move ahead for the next.
Keep your body, and finances, in good shape
A study had shown that more exercise naturally leads to higher earnings as people become more productive after working up a sweat. So, keeping your body in shape will also help one to better shape your financial situations. Plus, the habit of hard working and being disciplined as required for bodybuilding will also reflect on your money habits too.
Get your money buddies
Try to be in close touch with your friends who also have the same traits and financial goals as of yours. You can pick up good habits from them and also get some quick tips to be shared with each other. Try gathering as many friends through typical money lunches or other sources.
#Keep debts at bay
Start with the smallest and plan to conquer the biggest
If you have to handle multiple debts effectively, try to pay off the smallest ones first, which will give you confidence and feel of less loaded, which will further help you tackle the bigger ones. It is essential to pay off the smaller balances on a typical department store card to get a bigger balance.
Don’t cosign on loans
If a borrower, even if family, friends, or significant other, want you to cosign for their loans, you may end up in trouble. Your credit scores will get a hit if they don’t pay off the money and it may also end up the destruction of your relationships. Usually, the banks require a cosigner only when they don’t trust the borrower.
All these tips are just the starters to your full course financial planning, which takes a lot of time and practice to learn and master. However, once if you genuinely start practices these small tips, it can surely lead to better financial health and happy living.