By Dr. Kavita
Money management is a topic that makes most of us feel squirmy and uncomfortable. The reason is that the task requires extreme involvement and constant updates. Unfortunately, even a little carelessness here could cost a lot in the long run.
So without wasting much time, let us directly get on to some useful and easy money management tips that all of us can follow and put in to practice:
Getting started
The first step to managing your money properly is to know exactly how much you earn and how much you need to spend it. You could make a list for this. Make two separate columns and list all the activities that earn an income for you in the left hand column and then list out all the activities that need money to be spent on them in the right hand column.
Both the income and outgoing column details should be relevant to every single month of the year. I am sure you would argue that not every single month of the year comes in with exactly the same amount of expenses. Yeah, I thought of that too. So just add an item called ‘miscellaneous’ at the end of the expenses column. Any unexpected expenses can be adjusted here.
Sort the essentials and non-essentials
The expenses column needs more work than the income column for obvious reasons. Income is often fixed and does not waver much. Okay, so now you will have to sort out the essentials from the luxuries from all the items listed in expenses.
Make sure that you list out your utility expenses, credit card bills, travel expenses, food and all such things in the essentials. After you have done that, just add in another item named ‘savings’ in to the essentials. The miscellaneous item also goes in here.
The rest of the expenses can be categorized under non-essentials.
Funding the expenses
Now you will first need to fund the activities listed under essentials in the expenses category. Make sure that you put in maximum amount of funds into savings and about 35% of that in to the miscellaneous funds. Any income remaining after all this, can be put into fund the non-essentials. The idea here is that non-essentials can wait. Even if you cannot find enough money to get your non-essentials done this month, wait until your money management schedule puts in enough money in to this category.
By doing this you have not only paid all your bills on time each month, but also have made provisions to long term saving of money each month and also funded a separate account that will pay for the sudden and unexpected expenses that may crop up each month. The non-essentials have also been taken care and will not encroach upon your savings.
Finally, what you need to make this money management process a success, is discipline and determination to stick to the rules.
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