Just think how much time you spend every week earning money. Is it anywhere between 40-60 hours? Now think about the number of hours you spend in managing that money recording your expenses, creating budgets, looking at your savings and investments.
The answer would be “very little time”. There lies a problem: We spend all our time earning money and do not focus enough time on managing our money well!
In this blog post, we will discuss 3 tips to managing your money well.
A budget is a great way to keep a check on your expenses, which in turn can impact your savings. Broadly divide your expenses into different heads such as Fixed Expenses such as Rent, EMI, school fees etc. Variable expenses and non discretionary expenses such as Electricity, petrol, maid, groceries, utilities etc.
Variable and discretionary expenses such as shopping, eating out, entertainment, gifting, travel etc. While the first and second may be largely fixed, it is the third component where one can easily go overboard. Hence fixing a budget for these set of expenses and tracking them is crucial. Our money manager system allows you to set budgets and track them automatically.
Track your expenses
It is important to track your expenses and see where are you spending your money. Small expenses add up quickly and become large chunks. For example, when you work 5 days a week and spend Rs 150 on coffee at Starbucks each day, then that adds up to Rs 3000 per month. It is not only an expense but also an opportunity cost. If you had invested Rs 3000 in an SIP for 10 years you would get Rs 8.35 lacs (@15% return) at the end of it. Now you see how that cup of coffee at Starbucks adds up. Therefore you need to focus on the categories where you are spending your money and see how to be prudent.
Saving money is extremely important but it is only half the battle. Investing the savings appropriately is equally important too. Even in this case discipline is very important. You need to set the goals you are saving for and choose investing tools that will help you meet those goals. If you feel comfortable you can do this on your own or seek help from professionals who can help you with investing your money.
Creating the habit of actively managing your money by tracking your expenses and investments will lead to a safe and secure future for you and your loved ones. Start small and be disciplined! You will see huge benefits coming you way.