10 money management tips you can take to the bank

The world at large is now slowly starting to recover from the devastation wrecked by the coronavirus pandemic. Aside from the human toll, the economic impact delivered a blow to people's finances as well.

For many who lost their source of income, it was a wake-up call to start managing their finances better. Those, on the other hand, who were wise with their money, managed to ride through the lean period relatively smoothly by comparison.

Regardless, it's always a good time to start keeping tabs on your finances, and with that in mind, we give you 10 money management tips:

Take care of your immediate needs first

Before you rush to formulate a budget, it is important that you establish what your priorities in life are right this moment. What needs to be done now has to take priority over any future planning.

So, with that in mind, take a look at your immediate needs. Do you have a stack of unpaid bills? Any unavoidable expenditures such as a medical procedure or education payments?

If so, make that your immediate priority and account for those costs first.

Measure your monthly take and outflows

It's hard to manage money if you don't even know how much money you're working in the first place.

Start with your monthly income minus taxes. Add that to any surplus income you may be earning by way of freelancing or a side business.

Once that is done, see how much your monthly outflow is. Put together everything including bills, credit statements, Paytm history, and any other expenditures, and add up your monthly expenses.

See where the bulk of your money goes. Categorize spends by order of importance. You will surely realize there are certain unnecessary areas where you overspend.

Make a Budget

Now that you have a good account of what comes in and what goes out, make a plan that is in tune with your spending patterns.

If there's something you really enjoy doing, like a Saturday night outing with your friends, there's no need to cut that out. Instead, budget your other expenses (without cutting into any emergency funds).

Maintain an emergency fund

The pandemic of 2020 proved that it's hard to predict when a cash crunch might arise. For this reason, it's important that you set aside some easy-to-access funds.

While keeping this emergency fund aside will eat into your expenses elsewhere a bit, it will provide you with a feeling of security that you won't get any other way.

Save, save, save!

No matter whether you're barely earning enough to make ends meet or you're rolling in money, one habit you must never break is saving regularly.

It's not like you have to lock your money in an investment scheme, as even the interest generated by most savings accounts will add up to a tidy sum over time, and it's insured by the government!

Take advantage of Employee Provident Fund

If you earn over INR 15,000 per month, you're eligible for Employee Provident Fund (EPF). The fund is made up of contributions from the employee as well as employer every month, with both contributing 12 percent of the employees' monthly salary.

The accrued interest thereafter is tax-free and the employee can withdraw a lump-sum on retirement.

Revaluate your health insurance

Take a good look at your health insurance plan and compare it to other offerings to see what sort of benefits you're missing out on that could significantly cut down the expenses from your own pocket.

Paper, not plastic

The arrival of convenient cashless payment modes has made transactions infinitely easier than the old-fashioned method of paying for everything with cash.

However, you tend to spend more casually when a purchase is simply a UPI code or credit card swipe away. Instead, the act of actually pulling out your purse or wallet, counting and putting together the notes of hard-earned money on the cashier's table hits home much harder.

Increase your investment options

Don't get hung up on one type of investment. Explore your options. Interest rates on various schemes are constantly changing and competing banks are introducing newer plans.

For example, you may feel fixed deposits and PPFs are safer and more reliable than say, mutual funds. But ask around, talk with your friends and family to see how you can make it work to your advantage while avoiding any pitfalls.

Find what works and stick to it

After a few months of playing around with the above options, you will ideally arrive at an arrangement that just ‘clicks' for you. Stick with it and don't get sidetracked.

Avoid getting tempted by shiny new avenues or fuzzy advice and you will find that it will pay off for you in the long run.

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