My mom excelled at money management. At the end of every month, she would bury herself in her diary where she noted our monthly expenses. She ensured that every missed delivery by the milkman was duly noted and the laundry guy received his right payment.
I am sure you have similar stories to tell. Our mothers were experts at managing the house on a budget. Unfortunately, it has somehow not passed to our generation. We are more likely to relate to Rebecca Bloomwood from Confessions of a Shopaholic. Although not to the same degree.
We are much better at earning than saving and investing. However, being financially independent and knowing how to manage and grow your money has now become a basic life skill.
I know so many women who wish they knew better when it comes to money. Well, if you are in the same boat, worry no more. I have it covered for you and here are a few tips to help you in this regard.
Manage your money with these simple tips
Always Save first
Our wishlist is almost endless. Whether it is an international trip or a luxury watch, we want to have it all. Our generation lives by the mantra of living in the present. We often forget that unlike our parents, we won’t have a pension to support our post-retirement life.
The key is to save first and then spend the rest. A general thumb rule is to save 20% of your salary. You can open a separate bank account if you haven’t been able to save despite several efforts.
Invest your savings
Investment is as important as water is to plants. It helps in growing your money so that you can build wealth for yourself. Would you believe me if I say that every penny invested today can become a hundred in the future? Yes, it is possible provided you choose the right investment tools. Here are a few investment options that you can choose from.
- Mutual funds – Often, women stay away from the stock market because they don’t have the time to track it on a daily basis. Many others find it difficult to understand its technicalities. This is where mutual funds score points. There are experts who do all the work and you only have to invest your money. You can either invest a lump sum amount or follow the SIP method. Using the SIP method, you can invest monthly in easy instalments. Apart from great returns, mutual funds also offer tax benefits.
- Real estate – Most of our Indian parents stress on buying a home once we start earning. I have realized that it is all with good reason. Property is an investment that only appreciates in the long term. Owning a house is a dream that may take years of hard work and savings. However, it will be your safety cover on a rainy day.
- Government bonds- These make a good option if you do not want to take too much risk. When you buy a government bond, you are essentially lending money to the government. You make money by earning interest on this loan. Similar corporate bonds are also available in the market but they are not as risk-free as government bonds.
Limit credit cards usage
Credit cards seem to make life easier by offering an easy loan for a short time. You often get tempted into buying things that are otherwise unaffordable. This is where the problem lies. Instead of making your life simple, credit cards put you in a vicious cycle of debt.
I know credit cards offer attractive reward points and special privileges. To avail such benefits, you can use credit cards to pay for your heavy-duty purchases or travel plans. Tracking your expenses will also become easy if you use cash or debit card to pay your bills.
Make a budget
I know that a lot of you may find this complex and would rather not have one. Many of us are not too good at making regular entries in excel sheets. There are several budgeting apps to help in this regard. A few of them are Mint, PocketGuard, Pocket book, Wally and You Need a Budget. You can even link some of these to your bank accounts and make budgeting more effective.
To prepare a monthly budget, you can create separate expense buckets like groceries, bills, entertainment, travel etc. Give an approximate amount to each bucket depending upon how much you have paid for them in the past. You will require 2-3 months to make necessary adjustments and arrive at the right budget.
Preparing the budget is one thing but staying within it is what will test your determination.
I know that we girls like to pamper ourselves once in a while. You can use your bonus to buy an expensive item that you have been eyeing for a while. Another way is to save every month for any such pricey purchases. For your regular shopping, you can leave a little room in your monthly budget.
With these easy tips, you can easily bring your expenses on track. A strong determination and commitment are all that you need. Everything else will follow. With savings and right investments, you can live a financially independent life.